Study: Firms often use automation to control certain workers’ wages
When we hear about automation and artificial intelligence replacing jobs, it may seem like a tsunami of technology is going to wipe out workers broadly, in the name of greater efficiency. But a study co-authored by an MIT economist shows markedly different dynamics in the U.S. since 1980.
Rather than implement automation in pursuit of maximal productivity, firms have often used automation to replace employees who specifically receive a “wage premium,” earning higher salaries than other comparable workers. In practice, that means automation has frequently reduced the earnings of non-college-educated workers who had obtained better salaries than most employees with similar qualifications.
This finding has at least two big implications. For one thing, automation has affected the growth in U.S. income inequality even more than many observers realize. At the same time, automation has yielded a mediocre productivity boost, plausibly due to the focus of firms on controlling wages rather...
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