why are there still so many jobs the history and future of workplace automation in this essay i begin by identifying the reasons that automation has not wiped out a majority of jobs over the decades and centuries automation does indeed substitute for labor as it is typically intended to do however automation also complements labor raises output in ways that leads to higher demand for labor and interacts with adjustments in labor supply journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity raise earnings and augment demand for labor changes in technology do alter the types of jobs available and what those jobs pay in the last few decades one noticeable change has been a polarization of the labor market in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution not to those in the middle however i also argue this polarization is unlikely to continue very far into future the final section of this paper reflects on how recent and future advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth i argue that the interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine codifiable tasks while amplifying the comparative advantage of workers in supplying problem solving skills adaptability and creativity

the great reversal in the demand for skill and cognitive tasks this paper argues that several of the poor labor market outcomes observed in the great recession can be traced back to a change in the demand pattern for skilled workers that started with the tech bust of 2000 in particular we show that around the year 2000 the demand for cognitive tasks underwent a reversal in response high skilled workers moved down the occupational ladder and increasingly displaced lower educated workers in less skill intensive jobs while these effects were present before the financial crisis of 2008 they became more obvious after jobs associated with the housing bubble disappeared

when does labor scarcity encourage innovation this paper studies whether labor scarcity encourages technological advances that is technology adoption or innovation for example as claimed by habakkuk in the context of nineteenth century united states i define technology as strongly labor saving if technological advances reduce the marginal product of labor and as strongly labor complementary if they increase it i show that labor scarcity encourages technological advances if technology is strongly labor saving and will discourage them if technology is strongly labor complementary i also show that technology can be strongly labor saving in plausible environments but not in many canonical macroeconomic models

comment on computerizing industries and routinizing jobs explaining trends in aggregate productivity by sangmin aum sang yoon tim lee and yongseok shin abstract aum et al 2018 quantify the impact of production complementarities and differential productivity growth across occupations and sectors on the slowdown of aggregate productivity growth this note expands their work to study substitutability between new computer equipment and labor in individual occupations as opposed to all occupations combined preliminary empirical evidence suggests 1 significantly different elasticities of substitution between computers and labor across occupations and 2 a strong correlation between productivity growth of computers and labor in occupations where these two inputs are complementary when they are substitutes however their productivity growth rates appear uncorrelated these findings have the potential to amplify or weaken the magnitude of the aggregate productivity slowdown explained by aum et al 2018 making their approach a promising avenue for future research

should capital be taxed abstract we design an infinite horizon heterogeneous agents and incomplete markets model to demonstrate analytically that in the absence of any redistributional effects of government policies optimal capital tax is zero despite capital overaccumulation under precautionary savings and borrowing constraints our result indicates that in the long run public debt is a better tool than capital taxation to restore aggregate productive efficiency

technology is changing lending implications for research abstract costello down and mehta 2020 trace their slider intervention to deviations from the credit line amount recommended by a credit scoring model the deviations are followed by larger delinquency declines and bigger sales orders and costello et al interpret these results using discretion based theories however incremental deviations are concentrated on newer clients rather than those the lender has accumulated soft information about deviations also appear larger for public than private borrowers my discussion evaluates whether these results align with discretion based theories and explores alternative interpretations based on salience and unique aspects of the trade credit setting differences in interpretation aside the evidence is informative about technological advances in commercial lending i conclude with an overview of several recent advances and discuss the implications for lending research

time consistent consumption taxation abstract we characterise optimal tax policies when the government has access to consumption taxation and cannot credibly commit to future policies we consider a neoclassical economy where factor income taxation is distortionary within the period due to endogenous labour and capital utilisation and non tax deductibility of depreciation contrary to the case where only labour and capital income are taxed the optimal time consistent policies with consumption taxation are remarkably similar to their ramsey counterparts the welfare gains from commitment are negligible while they are substantial without consumption taxation further the welfare gains from taxing consumption are much higher without commitment

speculative trading in mean reverting markets mean reversion is a feature largely recognized for the price processes of many financial securities and especially commodities in the literature there are examples where some simple speculative strategies before transaction costs were devised to earn excess returns from such price processes actually the gain opportunities of mean reversion must be corrected to account for transaction costs which may represent a major issue in this work we try to determine sufficient conditions for the parameters of a mean reverting price process as a function of transaction costs to allow a speculative trader to have positive expectations when deciding to take a position we estimate the mean reverting parameters for some commodities and correct them for transaction costs to assess whether the potential inefficiency is actually relevant for speculative purposes

wealth taxation and wealth accumulation theory and evidence from denmark using administrative wealth records from denmark we study the effects of wealth taxes on wealth accumulation denmark used to impose one of the world s highest marginal tax rates on wealth but this tax was greatly reduced starting in 1989 and later abolished due to the specific design of the wealth tax the 1989 reform provides a compelling quasi experiment for understanding behavioral responses among the wealthiest segments of the population we find clear reduced form effects of wealth taxes in the short and medium run with larger effects on the very wealthy than on the moderately wealthy we develop a simple life cycle model with utility of residual wealth bequests allowing us to interpret the evidence in terms of structural primitives we calibrate the model to the quasi experimental moments and simulate the model forward to estimate the long run effect of wealth taxes on wealth accumulation our simulations show that the long run elasticity of taxable wealth with respect to the net of tax return is sizable at the top of the distribution

optimal taxation and debt with uninsurable risks to human capital accumulation we consider an economy where individuals face uninsurable risks to their human capital accumulation and analyze the optimal level of linear taxes on capital and labor income together with the optimal path of government debt we show that in the presence of such risks it is beneficial to tax both labor and capital and to issue public debt we also assess the quantitative importance of these findings and show that the benefits of government debt and capital taxes both increase with the magnitude of idiosyncratic risks and the degree of relative risk aversion jel d52 h21 h24 h25 h63 j24 human capital is an important component of wealth both at the individual and aggregate level and its role has been investigated in various fields in economics in public finance jones manuelli and rossi 1997 show that the zero capital tax result of chamley 1986 and judd 1985 1 can be strengthened if human capital accumulation is explicitly taken into account specifically they demonstrate that in a deterministic economy with human capital accumulation in the long run not only capital but also labor income taxes should be zero hence the government must accumulate wealth that is public debt be negative to finance its expenditure

the economic consequences of professional sports strikes and lockouts post evaluation of the effects of the lockout an examination of the impact of past work stoppages in professional football and basketball can shed some light on the potential impact of the nba lockout as well as the viability of professional sports as engines of economic growth in cities the parameter estimates from a reduced form empirical model of the determination of real per capita income in 37 standard metropolitan statistical areas smsas over the period 1969 1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises further the departure of professional basketball from cities had no impact on their economies in the following years these results refute the idea that attracting professional sports franchises represents a viable economic development strategy

the rise and decline of general laws of capitalism economists have long been drawn to the ambitious quest of discovering the general laws of capitalism david ricardo for example predicted that capital accumulation would terminate in economic stagnation and inequality as a greater and greater share of national income accrued to landowners karl marx followed him by forecasting the inevitable immiseration of the proletariat thomas piketty s 2014 tome capital in the twenty first century emulates marx in his title his style of exposition and his critique of the capitalist system piketty is after general laws that will demystify our modern economy and elucidate the inherent problems of the system and point to solutions but the quest for general laws of capitalism is misguided because it ignores the key forces shaping how an economy functions the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from various different economic arrangements are distributed despite his erudition ambition and creativity marx was led astray because of his disregard of these forces the same is true of piketty s sweeping account of inequality in capitalist economies in the next section we review marx s conceptualization of capitalism and some of his general laws we then turn to piketty s approach to capitalism and his general laws we will point to various problems in piketty s interpretation of the economic relationships underpinning inequality but the most important shortcoming is that

how should capital be taxed this survey discusses how capital should be taxed in advanced economies we review the theoretical optimal tax literature survey empirical studies on the distribution of capital and the distortion

capital is back wealth income ratios in rich countries 1700 2010 how do aggregate wealth to income ratios evolve in the long run and why we address this question using 1970 2010 national balance sheets recently compiled in the top eight developed economies for the united states united kingdom germany and france we are able to extend our analysis as far back as 1700 we find in every country a gradual rise of wealth income ratios in recent decades from about 200 300 in 1970 to 400 600 in 2010 in effect today s ratios appear to be returning to the high values observed in europe in the eighteenth and nineteenth centuries 600 700 this can be explained by a long run asset price recovery itself driven by changes in capital policies since the world wars and by the slowdown of productivity and population growth in line with the s g harrod domar solow formula that is for a given net saving

compensating differentials and the social benefits of the nfl abstract we use hedonic rent and wage equations to measure compensating differentials in central cities and metropolitan areas with franchises of the national football league rents are about 8 percent higher in the central cities but this impact may not carry over to broader geographical areas wages are about 2 percent lower in areas with teams but the standard error on this parameter is large the central city results indicate that sports franchises appear to be a public good once these quality of life benefits are included in the calculus the large public expenditure on new stadiums appears to be a good investment for cities and their residents

workers machines and economic growth this paper models technology adoption as replacing workers by machines which perform the same job in the production process the paper shows that such modelling of technology adoption affects significantly the analysis of economic growth this model can explain large and persistent international differences in output levels and growth rates caused by small differences in underlying parameters

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

sports led tourism spatial displacement and hotel demand we analyze the relationship between professional sports events and concerts held in la s staples center and nearby hotel performance government led economic redevelopment projects often envision sports facilities as tourist magnets little evidence exists supporting links between sporting events and hotel demand an empirical analysis exploiting exogenous daily variation in the timing of games and concerts from 2002 to 2017 shows a small positive impact on room revenue at hotels within one mile and larger room revenue decrease at hotels located one to 4 miles away the overall impact on hotel room revenue and rooms rented was not positive nearby hotel room rates increased during nba and nhl work stoppages the city granted four new hotels built very near the arena exemptions from occupancy taxes for 20 25 years these exemptions reduced hotel tax revenues by a minimum of 4 5 million annually and may not have been needed to spur new hotel development jel h26 h71 z28

a non scale directed technical change model with endogenous labor share we extend a directed technical change dtc model without scale effects that allows labour share to vary over time by decomposing the labour share by sectors skilled and unskilled and in line w

the effect of intensive margin changes to task content on employment dynamics over the business cycle previous empirical studies investigating the employment impact of technological change have relied on cross sectional measures of occupational tasks here the author links microdata on individual

the decline in capital efficiency and labour share we calibrate and simulate a neoclassical growth model with a variable elasticity of substitution production function and three types of technological change labour augmenting capital augmenting and investment specific in this framework we find that the decline in us labour share was caused by a large decline in capital efficiency which led to a decrease in the ratio of effective capital to effective labour in a context in which capital and labour are gross complements moreover the decline in the relative price of investment contributed to reducing the fall in us labour share while the increase in the economic depreciation rate of us fixed assets accounted for a small reduction in us labour share

pairs trading performance of a relative value arbitrage rule we test a wall street investment strategy pairs trading with daily data over 1962 2002 stocks are matched into pairs with minimum distance between normalized historical prices a simple trading rule yields average annualized excess returns of up to 11 for self financing portfolios of pairs the profits typically exceed conservative transaction cost estimates bootstrap results suggest that the pairs effect differs from previously documented reversal profits robustness of the excess returns indicates that pairs trading profits from temporary mispricing of close substitutes we link the profitability to the presence of a common factor in the returns different from conventional risk measures wall street has long been interested in quantitative methods of speculation one popular short term speculation strategy is known as pairs trading the strategy has at least a 20 year history on wall street and is among the proprietary statistical arbitrage tools currently used by hedge funds as well as investment banks the concept of pairs trading is disarmingly simple find two stocks whose prices have moved together historically when the spread between them widens short the winner and buy the loser if history repeats itself prices will converge and the arbi

residence and source based capital taxation in open economies with infinitely lived consumers abstract in this paper we investigate tax competition in a neoclassical growth model where each country may use both residence and source based capital taxes we show that both types of capital taxes are zero at any interior steady state just as in a closed economy for symmetric countries and even for countries that differ only with respect to size and productivity we prove analytically and verify numerically that the open economy policies coincide exactly with the closed economy policies in all time periods for countries that are asymmetric in other dimensions we find that source based taxes are used to manipulate the intertemporal terms of trade in the short run either way the fiscal externalities of source based taxes vanish once residence based taxes are allowed

equilibrium bias of technology this paper presents three sets of results about equilibrium bias of technology first i show that when the menu of technological possibilities only allows for factor augmenting technologies the increase in the supply of a factor induces technological change relatively biased toward that factor meaning that the induced technological change increases the relative marginal product of the factor becoming more abundant moreover this induced bias can be strong enough to make the relative marginal product of a factor increasing in response to an increase in its supply thus leading to an upward sloping relative demand curve i also show that these results about relative bias do not generalize when more general menus of technological possibilities are considered second i prove that under mild assumptions the increase in the supply of a factor induces technological change that is absolutely biased toward that factor meaning that it increases its marginal product at given factor proportions the third and most important result in the paper establishes the possibility of and conditions for strong absolute equilibrium bias whereby the price marginal product of a factor increases in response to an increase in its supply i prove that under some regularity conditions there will be strong absolute equilibrium bias if and only if the aggregate production function of the economy fails to be jointly concave in factors and technology this type of failure of joint concavity is possible in economies where equilibrium factor demands and technologies result from the decisions of different agents

positive long run capital taxation chamley judd revisited according to the chamley judd result capital should not be taxed in the long run in this paper we overturn this conclusion showing that it does not follow from the very models used to derive it for the main model in judd 1985 we prove that the long run tax on capital is positive and significant whenever the intertemporal elasticity of substitution is below one for higher elasticities the tax converges to zero but may do so at a slow rate after centuries of high tax rates the main model in chamley 1986 imposes an upper bound on capital taxes we provide conditions under which these constraints bind forever implying positive long run taxes when this is not the case the long run tax may be zero however if preferences are recursive and discounting is locally nonconstant e g not additively separable over time a zero long run capital tax limit must be accompanied by zero private wealth zero tax base or by zero labor taxes first best finally we explain why the equivalence of a positive capital tax with ever increasing consumption taxes does not provide a firm rationale against capital taxation

the structure of interdependence in international stock markets abstract this study investigates the dynamic structure of nine major stock markets using an error correction model and directed acyclic graphs dag the dag representation provides a structure of causality among these markets in contemporaneous time building on this contemporaneous structure and the estimated error correction model innovation accounting techniques are applied the results show that the japanese market is among the most highly exogenous and the canadian and french markets among the least exogenous in our nine market study the us market is highly influenced by its own historical innovations but it is also influenced by market innovations from the uk switzerland hong kong france and germany the us market is the only market that has a consistently strong impact on price movements in other major stock markets in the longer run

robotization and labour dislocation in the manufacturing sectors of oecd countries a panel var approach robots are the most important innovation which has affected the production process in the last three decades thanks to the latest advances in technology they have been able to perform an ever inc

fiscal policy in debt constrained economies abstract we study optimal fiscal policy in a small open economy soe with sovereign and private default risk and limited commitment to tax plans the soe s government uses linear taxation to fund exogenous expenditures and uses public debt to inter temporally allocate tax distortions we characterize a class of environments in which the tax on labor goes to zero in the long run while the tax on capital income may be non zero reversing the standard prediction of the ramsey tax literature the zero labor tax is an optimal long run outcome if the economy is subject to sovereign debt constraints and the domestic households are impatient relative to the international interest rate the front loading of tax distortions allows the economy to build a large aggregate debt position in the presence of limited commitment we show that a similar result holds in a closed economy with imperfect inter generational altruism providing a link with the closed economy literature that has explored disagreement between the government and its citizens regarding inter temporal tradeoffs

understanding the decline in the u s labor share evidence from occupational tasks abstract in this paper i provide empirical evidence linking the decline in the labor share to the replacement of occupations with substantial routine task content using cross industry variation i show that the overall labor share decline is driven by the replacement of occupations specializing in routine tasks i further find that the accelerated decline in the labor share since 2000 is associated with the replacement of higher skill occupations with substantial routine task content finally i estimate the effects of increased import competition on the labor share decline and how this relates to the replacement of occupational tasks while increased import competition plays a significant role in explaining the overall labor share decline and works through replacing routine occupations it cannot account for the accelerated labor share decline and replacement of higher skill occupations post 2000

investment in the shadow of conflict globalization capital control and state repression in conflict prone societies the fear of expropriation that accompanies a regime change reduces capital investment these reductions in investments in turn harm the economy amplifying the likelihood of regime change this article studies the implications of these feedback channels on the interactions between globalization capital control state repression and regime change i show that processes that facilitate capital movements e g globalization economic modernization and technologies that reduce transportation costs amplify the likelihood of regime change in conflict prone societies and strengthen the elite s demand for a strong coercive state in particular to limit their collective action problem and manage the political risk of regime change capitalists support a state that imposes capital control we identify two conflicting forces the boix effect and the marx effect which determine when capital control and state repression become complements nazi germany or substitutes latin american military regimes in right wing regimes

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

the race between man and machine implications of technology for growth factor shares and employment we examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks in which labor has a comparative advantage can be created in a static version where capital is fixed and technology is exogenous automation reduces employment and the labor share and may even reduce wages while the creation of new tasks has the opposite effects our full model endogenizes capital accumulation and the direction of research towards automation and the creation of new tasks if the long run rental rate of capital relative to the wage is sufficiently low the long run equilibrium involves automation of all tasks otherwise there exists a stable balanced growth path in which the two types of innovations go hand in hand stability is a consequence of the fact that automation reduces the cost of producing using labor and thus discourages further automation and encourages the creation of new tasks in an extension with heterogeneous skills we show that inequality increases during transitions driven both by faster automation and introduction of new tasks and characterize the conditions under which inequality is increasing or stable in the long run

assessing the incidence and efficiency of a prominent place based policy abstract this paper empirically assesses the incidence and efficiency of round i of the federal urban empowerment zone ez program using confidential microdata from the decennial census and the longitudinal business database using rejected and future applicants to the ez program as controls we find that ez designation substantially increased employment in zone neighborhoods and generated wage increases for local workers without corresponding increases in population or the local cost of living the results suggest the efficiency costs of first round ezs were relatively modest jel h26 h77 j31 r23 r58

ability biased technological transition wage inequality and economic growth thispaper develops a growthmodel characterizedbyability biasedtechnological transition in which the evolution of technology education attainment and wage inequality is consistent with the observed pattern in the united states and other advanced countries over the past several decades it argues that an increase in the rate of technological progress raises the return to ability and simultaneously generates an increase in wage inequality between and within groups of skilled and unskilled workers an increase in average wages of skilled workers a temporary decline in average wages of unskilled workers an increase in education and a productivity transitory slowdown

the declining fortunes of the young since 2000 abstract we document that successive cohorts of college and post college degree graduates experienced an increase in the probability of obtaining cognitive jobs both at the start of their careers and with time in the labor market in the 1990s however this pattern reversed for cohorts entering after 2000 profiles of the proportion of a cohort in cognitive occupations since school completion fall and become flatter with successive cohorts since cohort wage profiles display a similar pattern these findings appear to fit with a strong increase in demand for cognitive tasks in the 1990s followed by a decline in the 2000s

arbitragem estatistica estrategia long short pairs trading abordagem com cointegracao aplicada ao mercado de acoes brasileiro this article applies cointegration tests to identify stocks to be used in pairs trading strategy in addition to estimating long term equilibrium and model the resulting residual we use an indicator of profitability in in sample simulations to select stock pairs to compose a pairs trading portfolio we assessed the profitability of the strategy with data from the brazilian market between january 2005 and december 2009 considering we reached an average return of 17 49 per year sharpe ratio of 1 29 and low correlation with the market the results reinforce the use of cointegration in quantitative management statistical arbitrage circumvents the joint hypothesis dilemma of traditional market eciency tests because its definition is independent of any equilibrium model and its existence is incompatible with market eciency

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

inequality in a global perspective the basic story of global inequality in the last three decades has been an overall decline but one which is composed of quite intricate patterns there has been a decline in between country inequality as china and india have grown relative to the us and other rich countries this has been accompanied by an increase in within country inequality but this is itself composed of rising inequality in some countries such as china india and the us and declining inequality in other countries including large economies in latin america section ii of the paper reviews these patterns highlighting country diversity to make the central point that policy matters section iii addresses a normative question what relative weight should be given to within country and between country inequality in making an overall global assessment this section brings on board recent philosophical discourse including on inequality of opportunity in a global frame section iv returns to the policy matters theme and takes up global constraints on national redistribution policy in a globalized world for example a race to the bottom on taxation to attract and keep capital and talent and possible global institutional responses to alleviate these constraints

fiscal policy with limited time commitment we propose a theory of optimal fiscal policy consistent with the observation that governments typically inherit their predecessors plans and formulate their policies over a finite future horizon we use this framework which we call limited time commitment ltc to make two contributions first in a general stochastic model we show that under an intuitive sufficient condition a chain of successive governments with ltc sustains the full commitment fc ramsey equilibrium this equivalence result clarifies in which cases existing recursive methods to solve for fc plans have a positive interpretation based on partial commitment we apply this result in two benchmark models of optimal fiscal policy with and without capital in which the fc policy is time inconsistent second we investigate the implications of ltc in a model of capital taxation in which the fc outcome cannot be achieved with finite commitment we show that the internalisation of near future tax distortions represents a key distinction with respect to the literature on no commitment nc in a calibrated version of the model we find that a single year of fiscal commitment leads to large welfare gains approximately a third of the difference between fc and nc finally we use ltc to analyse commitment to different fiscal instruments and to study the importance of state contingency in fiscal plans