Nuremberg Research Seminar in Economics on 10 May 2023 – Zoom
You are invited to join the weekly Nuremberg Research Seminar in Economics on 10 May 2023, from 13.15 to 14.45 pm. The seminar will be held via Zoom. Pascual Restrepo (Boston University) will be talking about „Automation and Rent Dissipation”.
More information can be found here:
This paper studies the effects of automation technologies in economies with labor market distortions where workers earn rents on their jobs. We show that automation is targeted at high-rent jobs. This creates rent dissipation, reducing wages for displaced workers and aggregate TFP beyond their competitive effects. It also implies that among equal workers, automation creates a more pronounced decline in wages at higher quantiles of the within-group wage distribution. Using data for the US from 1980 to 2016, we provide empirical evidence consistent with the rent dissipation mechanism. We also show how the general equilibrium effects of automation can be estimated. Our results suggest that the baseline (“competitive”) effects of automation account for 46% of the increase in between-group inequality in the United States since 1980, while the rent dissipation effects add another 20% to this number. We also estimate that automation brought almost zero TFP and (utilitarian) welfare gains on net since 1980.