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Technology, Productivity, Growth, and Jobs

Paper Session

Friday, Jan. 4, 2019 8:00 AM - 10:00 AM

Atlanta Marriott Marquis, A706
Hosted By: Society of Policy Modeling & American Economic Association
  • Chair: Dominick Salvatore, Fordham University

Automation and New Tasks: The Implications of the Task Content of Production for Labor Demand

Daron Acemoglu
,
Massachusetts Institute of Technology
Pascual Restrepo
,
Boston University

Abstract

We present a framework for understanding the effects of automation and other types of technological changes on labor demand, and use it to interpret
changes in US employment over the recent past. At the center of our framework is the *task content of production*. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a *displacement effect*. As a result, automation always reduces the labor share in value added (of an industry or economy) and may also reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a *reinstatement effect*, and always raises the labor share and labor demand. We show how the role of changes in the task content of production---due to automation and new tasks---can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades.

The Old Normal Meets the New Normal

Jason Furman
,
Harvard University

Abstract

For the last fifty years economywide productivity growth has averaged about 1.5 percent annually while the demographic outlook is consistent with 0.5 percentage point annual growth in the labor force. Together these two would imply GDP growth of about 2.0 percent, the old normal. At the same time, safe interest rates appear to be much lower than they were historically while risky returns have not fallen, the new normal. This paper seeks to explain the combination of expected growth with unexpectedly low interest rates and the role that technology may or may not be playing in these developments.

Prospects for a Productivity Growth Revival

Robert J. Gordon
,
Northwestern University

Abstract

The 2018-19 stimulus to the U.S. economy from fiscal expansion and rising stock market wealth makes a near-term acceleration of GDP growth likely from the demand side. The question is, how can the economy provide the necessary growth in supply to match the faster demand growth? Labor markets are already tight, and the unemployment rate is nearing the lowest rates reached in the last 50 years. Productivity growth has been in the doldrums, growing for the total economy at only 0.6 percent per year during 2010-17. The paper proposes a resolution to the puzzle posed by the definitional linkage between growth in output, output per hour, and hours of work – either hours will grow faster despite labor shortages, or productivity growth will revive, or some of the demand surge will take the form of faster inflation rather than real growth.

Recent United States Economic Performance and the Prospects for Future Growth

Dale Jorgenson
,
Harvard University

Abstract

In this paper we analyze the sources of U.S. economic growth during the Great Recession of 2007-2009 and subsequent recovery and consider the implications for future growth. U.S. economic performance since the recession has been weak. Productivity growth collapsed during the recession and has failed to recover. Investment fell sharply during the recession and has recovered very slowly. Employment growth declined during the recession, especially for less-educated groups, but has recently rebounded. The continued revival of U.S. economic growth will likely benefit from stronger productivity growth and increased investment, but will be limited by slower growth of the U.S. labor force.

Narratives about Technologically-Induced Job Degradation and Loss Then and Now

Robert J. Shiller
,
Yale University

Abstract

Ever since the Luddite demonstrations of 1811, there has been public fear of machines replacing jobs, or, if not replacing, degrading them. Fears grew particularly in times of depression. Henry George's best-seller Progress and Poverty came at the end of the depression of the 1870s, and the worries about technological unemployment soared during the Great Depression of the 1930s. The question now is whether such fears have been amplified recently, and whether they might grow in feedback with any disturbance in economic activity.
Discussant(s)
Dominick Salvatore
,
Fordham University
JEL Classifications
  • E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
  • D2 - Production and Organizations