Explaining the Labor Share: Automation Vs Labor Market Institutions

• Type: Article in International Scientific Journal
• Date: 2022

Authors

Guimaraes, L (Author) Other; Pedro Rui Mazeda Gil (Author) FEP

Journal

Title: Labour Economics

Vol. 75

ISSN: 0927-5371

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 21 Citations

Scopus - 20 Citations

Other information

Authenticus ID: P-00W-994

DOI: 10.1016/j.labeco.2022.102146

Abstract (EN): We propose a simple model to assess the evolution of the US labor share and how automation affects employment. In our model, heterogeneous firms may choose a manual technology and hire a worker subject to matching frictions. Alternatively, they may choose an automated technology and produce using only machines (robots). Our model suggests that automation reduces the labor share but increases employment and wages. Furthermore, our model suggests that labor market institutions are unlikely to have played a major role in the fall of the US labor share after 1987. Instead, technological factors are a more promising candidate.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 12