Automation Experiments and Inequality

Many experiments study the productivity effects of automation technologies such as generative algorithms. A key test in these experiments relates to inequality: does the technology increase output more for high- or low-skill workers? However, the theoretical content of this empirical test has been unclear. Here, we formalize a theory that describes the experimental effect of automation technologies on worker-level output and, therefore, inequality. Worker-level output depends on a task-level production function, and workers are heterogeneous in their task-level skills. Workers perform a task themselves or delegate it to the automation technology. The inequality effect of improved automation depends on the interaction of two factors: (i) the correlation in task-level skills across workers, and (ii) workers' skills relative to the technology's effective skill. In many cases we study, the inequality effect is non-monotonic --- as technologies improve, inequality decreases then increases. The model and descriptive statistics of skill correlations generally suggest that the diversity of automation technologies will play an important role in the evolution of inequality.