February 24, 2014

BOTH:

Did robots cause the decline of labor? Or was it China? Why has labor's share of income declined in advanced countries? (Noah Smith, 2/24/14, The Week)

Mike Elsby and his coauthors find support mostly for story number three. In their own words:

U.S. data provide limited support for...explanations based on the substitution of capital for (unskilled) labor to exploit technical change embodied in new capital goods...[I]nstitutional explanations based on the decline in unionization also receive weak support...[W]e provide evidence that highlights the offshoring of the labor intensive component of the U.S. supply chain as a leading potential explanation of the decline in the U.S. labor share over the past 25 years. [emphasis mine] [The Decline of the U.S. Labor Share]

This finding disagrees with some other recent papers, such as Karabarbounis and Neiman (2013), who support the "robots" story. Read Elsby et al. to see the particulars of the argument.

First we made jobs so easay that anyone could do them, then so easy that anything can do them.
Posted by at February 24, 2014 5:24 PM
  
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