Study finds automation replaced high-wage workers and drove US inequality growth
Updated
Updated · MIT News · May 7
Study finds automation replaced high-wage workers and drove US inequality growth
8 articles · Updated · MIT News · May 7
MIT's Daron Acemoglu and Yale's Pascual Restrepo say automation caused 52% of US income-inequality growth from 1980 to 2016, with 10 percentage points tied to removing wage premiums.
The paper says firms often automated to cut labour costs rather than raise efficiency, offsetting 60-90% of productivity gains and hitting non-college workers earning above peers hardest.
Using Census and industry data across 49 industries and 500 demographic groups, the Quarterly Journal of Economics study argues muted US productivity partly reflects profit-seeking automation choices.
If automation is a 'Prisoner's Dilemma' for firms, what can break the cycle of mutually destructive cost-cutting and boost real productivity?
Is 'so-so automation' a correctable market failure, or an inevitable feature of our current economic system?
With AI freezing entry-level jobs, what new pathways to a successful career can replace the ones that are now vanishing?
The Automation Inequality Engine: Explaining 50-70% of U.S. Wage Gap Changes Since 1980
Overview
Between 1980 and 2016, automation emerged as the main driver of wage inequality in the U.S., responsible for 50% to 70% of changes in the wage structure. This occurred as machines and software increasingly replaced routine tasks performed by workers, especially less-educated men, leading to reduced job opportunities and falling wages for these groups. While some automation allowed remaining workers to specialize and earn more, the overall effect was wage stagnation and growing education-based wage gaps. Systemic factors like tax policies favoring capital, declining public investment, and weakened unions accelerated automation’s impact, suppressing labor demand and worker bargaining power, and deepening inequality.