Re-Thinking the Capabilities of Machines in Economics

May 2017 | 825

Authors: Daniel Susskind

The literature exploring the effects of technological change on the labour market often relies on a very particular understanding of the capabilities of machines - known as the 'ALM hypothesis'. However, this hypothesis has often led this literature to underestimate these capabilities. Tasks that were believed to be out of reach of automation can now be automated. I set out two explanations for this underestimation - one that is explored in the recent literature and maintains the ALM hypothesis, and a new explanation that challenges it. I propose a new hypothesis that contains the ALM hypothesis as a special case.

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

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

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