The Rise of the Machines: Automation, Horizontal Innovation, and Income Inequality
By David Hémous, M. Olsen. American Economic Journal: Macroeconomics, 2014
251 citations recorded by the source corpus.
We build an endogenous growth model with automation (the replacement of low-skill workers with machines) and horizontal innovation (the creation of new products). Over time, the share of automation innovations endogenously increases through an increase in low-skill wages, leading to an increase in the skill premium and a decline in the labor share. We calibrate the model to the US economy and show that it quantitatively replicates the paths of the skill premium, the labor share, and labor productivity. Our model offers a new perspective on recent trends in the income distribution by showing that they can be explained endogenously. (JEL D31, E25, J24, J31, O33, O41)
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/49995f3eeb48c6838c77f9ca3fba84b4c99e25e1
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In Economics and Econometrics
Citations in the corpus
- Technology, Vintage-Specific Human Capital, and Labor Displacement: Evidence from Linking Patents with Occupations∗ (2022, background): “…Kearney, 2006; Goos and Manning, 2007; Autor and Dorn, 2013); or the substitution between workers and capital (Krusell et al., 2000; Hornstein, Krusell, and Violante, 2005, 2007; Karabarbounis and Neiman, 2013; Acemoglu and Restrepo, 2021; Caunedo, Jaume, and Keller, 2021; Hemous and Olsen, 2021).”