Anna M. Salomons

Many technological innovations replace workers with machines, but this capital-labor substitution need not reduce aggregate labor demand because it simultaneously induces four countervailing responses: own-industry output effects; cross-industry input–output effects; between-industry shifts; and final demand effects. We quantify these channels using four decades of harmonized cross-country and industry data, where we measure automation as industry-level movements in total factor productivity (TFP) that are common across countries. We find that automation displaces employment and reduces labor's share of value-added in the industries in which it originates (a direct effect). In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induce...

Published: David Autor & Anna Salomons, 2018. "Is Automation Labor Share-Displacing? Productivity Growth, Employment, and the Labor Share," Brookings Papers on Economic Activity, vol 2018(1), pages 1-87.