Automation and Jobs: When Technology Boosts Employment

Boston University School of Law Law & Economics Paper No. 17-09

April 12, 2017

Abstract

Will industries use new information technologies to eliminate jobs? Sometimes productivity-enhancing technology increases industry employment instead. In manufacturing, jobs grew along with productivity for a century or more; only later did productivity gains bring declining employment. What changed? Markets became saturated. Using two centuries of data, a simple model of demand accurately explains the rise and fall of employment in the US textile, steel, and automotive industries. The model also predicts that computer technology should generate relatively greater job growth in non-manufacturing industries today. Estimates show computer use is associated with declining employment in manufacturing industries, but not in other sectors.

James Bessen
Director and Founder, Research on Innovation
765 Commonwealth Avenue
Boston, MA 02215

jbessen@bu.edu