Replication data for: The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

The advent of automation and the simultaneous decline in the labor share and employment among advanced economies raise concerns that labor will be marginalized and made redundant by new technologies. We examine this proposition using a task-based framework in which tasks previously performed by labor can be automated and more complex versions of existing tasks, in which labor has a comparative advantage, can be created. We characterize the equilibrium in this model and establish how the available technologies and the choices of firms between producing with capital or labor determine factor prices and the allocation of factors to tasks. In a static version of our model where capital is fixed and technology is exogenous, automation reduces employment and the share of labor in national income and may even reduce wages, while the creation of more complex tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research towards automation and the creation of new complex tasks. Under reasonable conditions, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. An increase in automation reduces the cost of producing using labor, and thus discourages further automation and encourages the faster creation of new complex tasks. The endogenous response of technology restores the labor share and employment back to their initial level. Although the economy contains powerful self correcting forces, the equilibrium generates too much automation. Finally, we extend the model to include workers of different skills. We find that inequality increases during transitions, but the self-correcting forces in our model also limit the increase in inequality over the long-run.

/pdf/the-race-between-machine-and-man-implications-of-technology-zhfiet218a.pdf

The Race between Machine and Man: Implications of Technology for Growth, Factor Shares and Employment

The conclusion of Robert Gordon’s The Rise and Fall of American Growth is, in the author’s own words, “startling.” According to Gordon, a Northwestern University economist, the United States has entered a period of permanent economic stagnation that will be marked above all by growing social inequality and poverty. The tone of the reviews of Gordon’s book points to growing anxiety at the commanding heights of the financial aristocracy. “Perhaps the future isn’t what it used to be,” writes Paul Krugman in the New York Times. “And you have to wonder about the social and political consequences of another generation of stagnation or decline in working-class incomes.” In the Wall Street Journal, Edward Glaeser’s review, titled “Those Were the Days,” notes that “Mr. Gordon has data on his side.” Glaeser writes, “Looking toward the future, whatever miracles come from Silicon Valley, they are (as Mr. Gordon convincingly argues) likely to have a relatively modest impact on GDP. But I suspect they will do little to help the employment prospects for the more than 15 percent of men aged 25 to 54 who are jobless.” Similar concerns can be found in Foreign Affairs and the Financial Times. Writing in Prospect magazine, former Treasury Secretary Lawrence Summers calls Gordon’s findings “disturbing.” He writes, “I wish that I could convincingly rebut his claims.” In other words, the period of relative capitalist stability in the United States has come to an end. According to Gordon, the postwar period of rapid growth was an aberration that will not be repeated. The “social and political consequences” of this are, as Krugman suggests, immense. The New York Times columnist, speaking on behalf of the ruling class, fears that tens or hundreds of millions of workers and young people will be forced into social struggle against the corporations and the government. This increasingly self-conscious fear of social revolution, bound up with a frantic and existential drive for profit, will further animate the deeply anti-democratic, authoritarian tendencies in the ruling class. The essential conclusion that flows from Gordon’s book, which the author himself avoids, is that the world political situation is headed toward either social revolution or war and dictatorship. The value of Gordon’s book lies in its synthesis of economic empiricism and historical analysis. He begins in the year 1870, in the aftermath of the Civil War, which abolished slavery and marked the triumph of the wage labor system throughout the entire US. Gordon divides the history of post-bellum capitalist development into distinct periods: 1870 to 1920, 1920 to 1970, and 1970 to the present. A major strength of the book is the fact that Gordon tracks changes in the productive capacity of the US economy not only through standard measures of gross domestic product and annual income, but also by taking into account the impact of technological innovation on the living standards of the population. After analyzing 145 years of American growth, Gordon concludes that annual growth from 2015 to 2040 will be 1.20 percent, with all measures of productivity as well as GDP growth per person remaining drastically lower than during the periods of 1920 to 1970 and 1970 to 2014. That is, the United States economy is in terminal crisis and living standards for the vast majority of the population will continue to deteriorate.

The rise and fall of American growth: the US standard of living since the Civil War

Digital transformation: A review and research agenda

This paper examines the potentials of augmented reality (AR) technology in supply chain management (SCM) and logistics. Specifically, we provide an overview of the technology’s various value propositions and its ability to support companies’ business processes. Although the emergence of Industry 4.0 has renewed the interest in AR, and how it can address several issues challenging existing business models, rigorous studies investigating the potentials of AR for SCM and logistics activities are scant. To bridge this knowledge gap, we conducted a systematic literature review to compile existing literature, identify current research gaps, and systematize AR research in SCM and logistics activities. In total, forty-three (43) papers were thoroughly analyzed. The findings of this study reveal that AR can add value in five main areas, namely warehousing, manufacturing, sales and outdoor logistics, planning and design and human resource management. Moreover, we discuss organizations’ challenges when deploying AR in SCM and logistics and propose exploratory research opportunities for further investigation. In this paper, we highlight numerous practical implications of AR in SCM and recommend that organizations consider AR as a potential solution for enhancing business processes, improving operational efficiencies, and increasing overall competitiveness. This study represents one of the first attempts to synthesize AR’s literature from an SCM and logistics perspective.

The potentials of augmented reality in supply chain management: a state-of-the-art review

New developments in the fields of artificial intelligence or robotics are receiving considerable attention from businesses, as they promise astonishing gains in process efficiency—sparking a surge of corporate investments in new, digital technologies. Yet, firms did not become per se more productive, as labor productivity growth in various industrial nations has decelerated in recent years. The fact that the adoption of innovative technologies is not accompanied by productivity increases has already been observed during the dawn of the computer age and became known as Solow’s Paradox. Thus, this paper takes stock of what is known about the Solow Paradox, before incorporating the findings into the debate of the current productivity slowdown. Based on an in-depth review of 86 empirical studies at the firm level, this paper uncovers various reasons for the emergence of the Solow Paradox, debates its following reversal marked by the occurrence of excess returns and deduces a model of factors influencing the returns on IT investments. Based on these insights, four overarching explanations of the modern productivity paradox namely adjustment delays, measurement issues, exaggerated expectations and mismanagement are discussed, whereby mismanagement emerges as a currently neglected, but focal issue.

Lessons from three decades of IT productivity research: towards a better understanding of IT-induced productivity effects

Trapped in the supply chain? Digital servitization strategies and power relations in the case of an industrial technology supplier

Abstract Despite longstanding research efforts, there is still ambiguity surrounding the business value created by IT. To approach this conundrum, research focus has progressed from an isolated investigation of IT to the assessment of complementarity between IT and different non-IT resources such as work practices or decision structures. However, incoherence around the characteristics and scope of these complementary non-IT resources has created a fragmented body of research, preventing a sustainable knowledge creation. Thus, in this paper we synthesize the dispersed research efforts, identify shortcomings in the extant literature, and derive opportunities for future research. Specifically, we present a converging definition of complementary non-IT resources and specify their role in the value creation process from IT by viewing it through three distinct lenses: microeconomic theory, resource-based view, and contingency theory. We structure current research efforts by organizing complementary non-IT resources into distinct categories, namely strategy, structure, practices, processes, and culture (organizational resources), top management support, internal relations, and external relations (relational resources), worker skill (non-IT human resources), non-IT physical resources, as well as internal funds and external funds (financial resources). Finally, we highlight five important shortcomings in the current literature, such as the predominant use of reductionist approaches or monolithic IT measures, and make actionable recommendations to resolve them. 

/pdf/lost-in-translation-it-business-value-research-and-resource-vfpokj6m.pdf

Lost in translation: IT business value research and resource complementarity—an integrative framework, shortcomings and future research directions

Die Industrie 4.0 verspricht Anwendern enormes Potenzial zur Steigerung der Prozesseffizienz sowie eine Erhohung der Produktinnovationen. Viele Unternehmen befurchten daher, ohne umfassende Investitionen in digitale Technologien den Anschluss zu verlieren und am Ende als Verlierer der digitalen Transformation zu gelten. Um dies zu vermeiden, wollen deutsche Industrieunternehmen beispielsweise bis 2020 jahrlich rund 40 Mrd. EUR in Industrie 4.0-Anwendungen investieren.

Zur Bedeutung von Solows Paradoxon: Empirische Evidenz und ihre Übertragbarkeit auf Digitalisierungsinvestitionen in einer Industrie 4.0

When the Machine Stops: The Impact of Information Technology Failure on Firm Value

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