A Model of Technological Unemployment

May 2017 | 819

Authors: Daniel Susskind


In the past 15 years a ‘task-based’ literature has emerged, exploring the consequences of technological change on the labour market. This literature supports an optimistic view about the threat of automation. In this paper I build a task-based model based on different reasoning about how machines operate. This leads to a far more pessimistic account of the prospects for labour. In a static model, increasingly capable machines drive down relative wages and the labour share of income and force labour to specialise in a shrinking set of tasks. In a dynamic version of the model, labour is driven out the economy at an endogenously determined rate, forced to specialise in a shrinking set of types of tasks, and wages steadily decline to zero. In the limit, labour is fully immiserated and ‘technological unemployment’ follows.

Revised July 2017.

JEL Codes: J20; J21; J23; J24; J30; J31; 031; 033

Keywords: Technological Change; Computerization; Automation; Job Tasks; Wages

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