Automation and New Tasks: How Technology Displaces and Reinstates Labor Daron Acemoglu and Pascual Restrepo NBER Working Paper No. 25684 March 2019 JEL No. J23, J24 Abstract This paper presents a framework for understanding the effects of automation and other technological changes on labor demand. It uses this framework to interpret changes in US employment over the recent past. At the center of the framework is the allocation of tasks to capital and labor—the task content of production. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a displacement effect. As a result, automation always reduces the labor share in value added and may reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. The paper shows how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades. The paper presents a task-based framework for understanding the implications of technology for labor demand and productivity. Production requires tasks which are allocated to capital or labor. New technologies not only increase the productivity of capital and labor at tasks they currently perform, but also impact the allocation of tasks to these factors of production—what we call the task content of production. Shifts in the task content of production can have major effects for how labor demand changes as well as for productivity. Automation corresponds to the development and adoption of new technologies that enable capital to be substituted for labor in a range of tasks. Automation changes the task content of production adversely for labor because of a displacement effect—as capital takes over tasks previously performed by labor. The displacement effect implies that automation reduces the labor share of value added. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. The paper shows how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades.Automation and New Tasks: How Technology Displaces and Reinstates Labor Daron Acemoglu and Pascual Restrepo NBER Working Paper No. 25684 March 2019 JEL No. J23, J24 Abstract This paper presents a framework for understanding the effects of automation and other technological changes on labor demand. It uses this framework to interpret changes in US employment over the recent past. At the center of the framework is the allocation of tasks to capital and labor—the task content of production. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a displacement effect. As a result, automation always reduces the labor share in value added and may reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. The paper shows how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades. The paper presents a task-based framework for understanding the implications of technology for labor demand and productivity. Production requires tasks which are allocated to capital or labor. New technologies not only increase the productivity of capital and labor at tasks they currently perform, but also impact the allocation of tasks to these factors of production—what we call the task content of production. Shifts in the task content of production can have major effects for how labor demand changes as well as for productivity. Automation corresponds to the development and adoption of new technologies that enable capital to be substituted for labor in a range of tasks. Automation changes the task content of production adversely for labor because of a displacement effect—as capital takes over tasks previously performed by labor. The displacement effect implies that automation reduces the labor share of value added. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. The paper shows how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades.