In the last few decades, one noticeable change has been a "polarization" of the labor market, in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution, not to those in the middle however, I also argue, this polarization is unlikely to continue very far into future. Journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity, raise earnings, and augment demand for labor.Ĭhanges in technology do alter the types of jobs available and what those jobs pay. However, automation also complements labor, raises output in ways that leads to higher demand for labor, and interacts with adjustments in labor supply.
In this essay, I begin by identifying the reasons that automation has not wiped out a majority of jobs over the decades and centuries.Īutomation does indeed substitute for labor-as it is typically intended to do.
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