IDEAS home Printed from https://ideas.repec.org/a/eee/jmacro/v77y2023ics0164070423000411.html
   My bibliography  Save this article

Does automation technology increase wage?

Author

Listed:
  • Shimizu, Ryosuke
  • Momoda, Shohei

Abstract

This paper examines the relationship between automation technology and wages. In the model, producers either choose automation or non-automation technology, whichever is more profitable. Furthermore, when producers introduce automation technology, they must pay fixed costs, which differ between industries. The main results of this paper indicate that the increased productivity of automation technology promotes automation, decreases labor income share, and also decreases wages when the level of automation diffusion is sufficiently high.

Suggested Citation

  • Shimizu, Ryosuke & Momoda, Shohei, 2023. "Does automation technology increase wage?," Journal of Macroeconomics, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:jmacro:v:77:y:2023:i:c:s0164070423000411
    DOI: 10.1016/j.jmacro.2023.103541
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0164070423000411
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmacro.2023.103541?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Autor & David Dorn & Lawrence F. Katz & Christina Patterson & John Van Reenen, 2017. "Concentrating on the Fall of the Labor Share," American Economic Review, American Economic Association, vol. 107(5), pages 180-185, May.
    2. Joseph Zeira, 1998. "Workers, Machines, and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1091-1117.
    3. Georgios Petropoulos & David Pichler & Francesco Chiacchio, 2018. "The impact of industrial robots on EU employment and wages- A local labour market approach," Bruegel Working Papers 25186, Bruegel.
    4. David Autor & Anna Salomons, 2018. "Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share," NBER Working Papers 24871, National Bureau of Economic Research, Inc.
    5. Boehm, Christoph E. & Flaaen, Aaron & Pandalai-Nayar, Nitya, 2020. "Multinationals, Offshoring, and the Decline of U.S. Manufacturing," Journal of International Economics, Elsevier, vol. 127(C).
    6. Hideki Nakamura & Joseph Zeira, 2024. "Automation and unemployment: help is on the way," Journal of Economic Growth, Springer, vol. 29(2), pages 215-250, June.
    7. Gene M. Grossman & Elhanan Helpman & Ezra Oberfield & Thomas Sampson, 2017. "The productivity slowdown and the declining labor share: a neoclassical exploration," CEP Discussion Papers dp1504, Centre for Economic Performance, LSE.
    8. Philippe Aghion & Céline Antonin & Simon Bunel, 2019. "Artificial Intelligence, Growth and Employment: The Role of Policy," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 510-511-5, pages 149-164.
    9. Bronwyn H. Hall, 2004. "Innovation and Diffusion," NBER Working Papers 10212, National Bureau of Economic Research, Inc.
    10. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    11. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    12. David Hémous & Morten Olsen, 2022. "The Rise of the Machines: Automation, Horizontal Innovation, and Income Inequality," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(1), pages 179-223, January.
    13. Alvarez-Cuadrado, Francisco & Long, Ngo Van & Poschke, Markus, 2018. "Capital-labor substitution, structural change and the labor income share," Journal of Economic Dynamics and Control, Elsevier, vol. 87(C), pages 206-231.
    14. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    15. David Autor & Anna Salomons, 2018. "Is Automation Labor Share–Displacing? Productivity Growth, Employment, and the Labor Share," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 1-87.
    16. Daron Acemoglu & Pascual Restrepo, 2018. "Artificial Intelligence, Automation, and Work," NBER Chapters, in: The Economics of Artificial Intelligence: An Agenda, pages 197-236, National Bureau of Economic Research, Inc.
    17. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum & Nicole Woessner, 2021. "The Adjustment of Labor Markets to Robots [“Skills, Tasks and Technologies: Implications for Employment and Earnings]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3104-3153.
    18. Yuki, Kazuhiro, 2012. "Mechanization, task assignment, and inequality," MPRA Paper 37754, University Library of Munich, Germany.
    19. Charles I. Jones & Jihee Kim, 2018. "A Schumpeterian Model of Top Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 126(5), pages 1785-1826.
    20. Prettner, Klaus, 2019. "A Note On The Implications Of Automation For Economic Growth And The Labor Share," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1294-1301, April.
    21. David H. Autor, 2015. "Why Are There Still So Many Jobs? The History and Future of Workplace Automation," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 3-30, Summer.
    22. Joachim Hubmer & Pascual Restrepo, 2021. "Not a Typical Firm: The Joint Dynamics of Firms, Labor Shares, and Capital–Labor Substitution," NBER Working Papers 28579, National Bureau of Economic Research, Inc.
    23. Michael Elsby & Bart Hobijn & Ayseful Sahin, 2013. "The Decline of the U.S. Labor Share," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(2 (Fall)), pages 1-63.
    24. repec:nbr:nberch:14019 is not listed on IDEAS
    25. Daron Acemoglu & Pascual Restrepo, 2020. "Unpacking Skill Bias: Automation and New Tasks," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 356-361, May.
    26. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    27. Daron Acemoglu & Pascual Restrepo, 2018. "Artificial Intelligence, Automation and Work," Boston University - Department of Economics - Working Papers Series dp-298, Boston University - Department of Economics.
    28. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    29. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    30. Berg, Andrew & Buffie, Edward F. & Zanna, Luis-Felipe, 2018. "Should we fear the robot revolution? (The correct answer is yes)," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 117-148.
    31. Jovanovic, Boyan & Lach, Saul, 1989. "Entry, Exit, and Diffusion with Learning by Doing," American Economic Review, American Economic Association, vol. 79(4), pages 690-699, September.
    32. Daron Acemoglu & Pascual Restrepo, 2018. "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," American Economic Review, American Economic Association, vol. 108(6), pages 1488-1542, June.
    33. Hamid Firooz & Zheng Liu & Yajie Wang, 2022. "Automation, Market Concentration, and the Labor Share," Working Paper Series 2022-05, Federal Reserve Bank of San Francisco.
    34. Simcha Barkai, 2020. "Declining Labor and Capital Shares," Journal of Finance, American Finance Association, vol. 75(5), pages 2421-2463, October.
    35. repec:bin:bpeajo:v:49:y:2019:i:2018-01:p:1-87 is not listed on IDEAS
    36. Drago Bergholt & Francesco Furlanetto & Nicolò Maffei-Faccioli, 2022. "The Decline of the Labor Share: New Empirical Evidence," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(3), pages 163-198, July.
    37. Joseba Martinez, 2018. "Automation, Growth and Factor Shares," 2018 Meeting Papers 736, Society for Economic Dynamics.
    38. repec:hal:spmain:info:hdl:2441/7n49nkmngd8448a5ts5gt5ade0 is not listed on IDEAS
    39. Nakamura, Hideki & Nakamura, Masakatsu, 2008. "Constant-Elasticity-Of-Substitution Production Function," Macroeconomic Dynamics, Cambridge University Press, vol. 12(5), pages 694-701, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David E. Bloom & Klaus Prettner & Jamel Saadaoui & Mario Veruete, 2023. "Artificial intelligence and the skill premium," Department of Economics Working Papers wuwp353, Vienna University of Economics and Business, Department of Economics.
    2. Yang, Jia & Pei, Yu & Qiang, Wei, 2024. "The impact of automation on human capital investment," Finance Research Letters, Elsevier, vol. 62(PB).
    3. Yuan, Sai & Zhou, Ran & Li, Mengna & Lv, Chengchao, 2023. "Investigating the influence of digital technology application on employee compensation," Technological Forecasting and Social Change, Elsevier, vol. 195(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ryosuke Shimizu & Shohei Momoda, 2020. "Does Automation Technology increase Wage?," KIER Working Papers 1039, Kyoto University, Institute of Economic Research.
    2. Ryosuke Shimizu & Shohei Momoda, 2021. "Does Automation Technology increase Wage?," Discussion papers ron343, Policy Research Institute, Ministry of Finance Japan.
    3. Guimarães, Luís & Mazeda Gil, Pedro, 2022. "Explaining the Labor Share: Automation Vs Labor Market Institutions," Labour Economics, Elsevier, vol. 75(C).
    4. Hideki Nakamura & Joseph Zeira, 2024. "Automation and unemployment: help is on the way," Journal of Economic Growth, Springer, vol. 29(2), pages 215-250, June.
    5. Ugur, Mehmet, 2024. "Innovation, market power and the labour share: Evidence from OECD industries," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    6. Basso, Henrique S. & Jimeno, Juan F., 2021. "From secular stagnation to robocalypse? Implications of demographic and technological changes," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 833-847.
    7. Juan E. Jacobo, 2022. "Back to the Surplus: An Unorthodox Neoclassical Model of Growth, Distribution and Unemployment with Technical Change," Papers 2211.14978, arXiv.org.
    8. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    9. Jacob, Tinu Iype & Paul, Sunil, 2024. "Labour income share, market power and automation: Evidence from an emerging economy," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 37-45.
    10. Matthias Firgo & Peter Mayerhofer & Michael Peneder & Philipp Piribauer & Peter Reschenhofer, 2018. "Beschäftigungseffekte der Digitalisierung in den Bundesländern sowie in Stadt und Land," WIFO Studies, WIFO, number 61633, January.
    11. Gregory, Terry & Salomons, Anna & Zierahn, Ulrich, 2016. "Racing With or Against the Machine? Evidence from Europe," VfS Annual Conference 2016 (Augsburg): Demographic Change 145843, Verein für Socialpolitik / German Economic Association.
    12. Naude, Wim, 2019. "The race against the robots and the fallacy of the giant cheesecake: Immediate and imagined impacts of artificial intelligence," MERIT Working Papers 2019-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. repec:hal:wpspec:info:hdl:2441/5j3i17uo7399t940lrt6h6n545 is not listed on IDEAS
    14. Panon, Ludovic, 2022. "Labor share, foreign demand and superstar exporters," Journal of International Economics, Elsevier, vol. 139(C).
    15. repec:spo:wpmain:info:hdl:2441/5j3i17uo7399t940lrt6h6n545 is not listed on IDEAS
    16. Germán Gutiérrez & Sophie Piton, 2020. "Revisiting the Global Decline of the (Non-housing) Labor Share," American Economic Review: Insights, American Economic Association, vol. 2(3), pages 321-338, September.
    17. Manuchehr Irandoust, 2024. "Employment and technology: Creative creation or creative destruction? An asymmetric analysis," Australian Economic Papers, Wiley Blackwell, vol. 63(2), pages 201-219, June.
    18. Baek, Seungjin & Jeong, Deokjae, 2023. "Factors Influencing Labor Share: Automation, Task Innovation, and Elasticity of Substitution," MPRA Paper 118730, University Library of Munich, Germany.
    19. Wang, Linhui & Cao, Zhanglu & Dong, Zhiqing, 2023. "Are artificial intelligence dividends evenly distributed between profits and wages? Evidence from the private enterprise survey data in China," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 342-356.
    20. repec:hal:spmain:info:hdl:2441/5j3i17uo7399t940lrt6h6n545 is not listed on IDEAS
    21. vom Lehn, Christian, 2018. "Understanding the decline in the U.S. labor share: Evidence from occupational tasks," European Economic Review, Elsevier, vol. 108(C), pages 191-220.
    22. repec:spo:wpecon:info:hdl:2441/5j3i17uo7399t940lrt6h6n545 is not listed on IDEAS
    23. Wang, Ting & Zhang, Yi & Liu, Chun, 2024. "Robot adoption and employment adjustment: Firm-level evidence from China," China Economic Review, Elsevier, vol. 84(C).
    24. Abeliansky, Ana Lucia & Prettner, Klaus, 2023. "Automation and population growth: Theory and cross-country evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 345-358.

    More about this item

    Keywords

    Automation; Wage; Labor share decline; Technology choice;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jmacro:v:77:y:2023:i:c:s0164070423000411. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622617 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.