Overview¶
We now use the task model to study how technology changes the demand for labor. In Section 5, we determined which tasks are performed by workers and which are performed by machines. The next step is to ask what happens when machines can take over some of the activities previously assigned to workers. This is more easily pictured in the case of manufacturing plants: a robot can move components or operate equipment, while workers continue to inspect finished pieces, diagnose faults, and prepare production plans.
As workers take over tasks, production becomes cheapefacr, but the workers who operated the equipment have lost part of what they used to do. This generates two forces on labor demand. Lower costs allow production to expand, increasing demand for the tasks that remain with workers. At the same time, automation is directly reducing the demand for labor. Our objective is to separate these forces and establish what they imply for employment, the labor share, and wages.
We follow Restrepo (2024, Sections~2.3--2.6), then develop a simple version of Acemoglu and Restrepo (2018)'s race between automation taking over tasks and the creation of new tasks that humans can perform. The treatment of different types of technological change in Acemoglu et al. (2025, Section~3) provides a useful companion.