Adam Smith Business School

Dr Pascual Restrepo, Boston University

'Tasks, Automation, And The Rise in US Wage Inequality' (co-authored by D. Acemoglu)
Thursday 3 February, 3pm - 4.30pm
Zoom online seminar

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Abstract

We document that between 50% and 70% of changes in the US wage structure over the last four decades are accounted for by the relative wage declines of worker groups specialised in routine tasks in industries experiencing rapid automation. We develop a conceptual framework where tasks across a number of industries are allocated to different types of labour and capital. Automation technologies expand the set of tasks performed by capital, displacing certain worker groups from employment opportunities for which they have comparative advantage. This framework yields a simple equation linking wage changes of a demographic group to the task displacement it experiences. We report robust evidence in favour of this relationship and show that regression models incorporating task displacement explain much of the changes in education differentials between 1980 and 2016. Our task displacement variable captures the effects of automation technologies (and to a lesser degree offshoring) rather than those of rising market power, markups or deunionisation, which themselves do not appear to play a major role in US wage inequality. We also propose a methodology for evaluating the full general equilibrium effects of task displacement (which include induced changes in industry composition and ripple effects as tasks are reallocated across different groups). Our quantitative evaluation based on this methodology explains how major changes in wage inequality can go hand-in-hand with modest productivity gains.

Biography

Pascual Restrepo’s research interests span labour and macroeconomics. His current research examines the impact of technology, and in particular of automation, on labour markets, employment, wages, inequality, the distribution of income, and growth. Recent empirical projects include a study of the impact of industrial robots on US labour markets, a study of how the decline of routine jobs interacted with the great recession, and a study on how aging and shortages of labour induce firms to automate their production process. His theoretical work centers on developing micro-founded models of technology choice to think about the short and long-run implications of different technologies and whether the resulting growth process is balanced.

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Further information: business-events@glasgow.ac.uk 

First published: 20 January 2022