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- Title
Frictions and the diffusion of automation.
- Authors
Charalampidis, Nikolaos
- Abstract
This paper studies the implications of business cycle frictions for the diffusion of permanent changes in automation. Incorporating task‐based production in different versions of the New Keynesian model reveals considerable short‐run implications. Price‐distorting nominal rigidities amplify the labor displacement and attenuate the productivity and welfare gains of automation during the transition to the new equilibrium. They exacerbate the falls in the labor income share, the job finding probability, the value of long‐term contracts, and labor market tightness. The inflation response follows a J‐curve. Frictions in capital supply and wage rigidities amplify the labor displacement and attenuate the productivity gains too.
- Subjects
BUSINESS cycles; MARKET tightness; FRICTION; AUTOMATION; LABOR market; LABOR productivity
- Publication
Manchester School (1463-6786), 2024, Vol 92, Issue 2, p148
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/manc.12461