Abstract
We propose a simple model to assess the evolution of the US labor share and how automation affects employment. In our model, heterogeneous firms may choose a manual technology and hire a worker subject to matching frictions. Alternatively, they may choose an automated technology and produce using only machines (robots). Our model suggests that automation reduces the labor share but increases employment and wages. Furthermore, our model suggests that labor market institutions are unlikely to have played a major role in the fall of the US labor share after 1987. Instead, technological factors are a more promising candidate.
| Original language | English |
|---|---|
| Article number | 102146 |
| Number of pages | 12 |
| Journal | Labour Economics |
| Volume | 75 |
| Early online date | 16 Mar 2022 |
| DOIs | |
| Publication status | Published - Apr 2022 |
Access to Document
- Explaining the labor share: automation vs labor market institutions
Copyright 2022 the authors. This is an open access article published under a Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium, provided the author and source are cited.