Gaggl, PaulEden, Maya2015-12-182015-12-182015-11https://hdl.handle.net/10986/23453This paper establishes that the rise in the income share of information and communication technology accounts for half of the decline in labor income share in the United States. This decline can be decomposed into a sharp decline in the income share of “routine” labor—which is relatively more prone to automation—and a milder rise in the non-routine share. Quantitatively, this decomposition suggests large effects of information and communication technology on the income distribution within labor, but only moderate effects on the distribution of income between capital and labor. A production structure calibrated to match these trends suggests modest aggregate welfare gains from automation.en-USCC BY 3.0 IGOSELF EMPLOYEDGROWTH RATESEMPLOYMENTSOCIAL COSTSCONSUMPTION EXPENDITURESCAPITAL MARKETSCONSUMER DURABLESECONOMIC GROWTHACCOUNTINGPRODUCTIONCOMMUNICATION TECHNOLOGIESCAPITAL ACCUMULATIONSTOCKINFORMATION TECHNOLOGYINCOMEDEPRECIATIONSERVICE OCCUPATIONSLABOR ALLOCATIONEXCHANGEINFORMATIONEXPORTSELASTICITYASSETMARGINAL PRODUCTNET CAPITALDISTRIBUTION OF INCOMEWELFAREOPTIMIZATIONEFFECTSLABOR ECONOMICSDISTRIBUTIONEQUILIBRIUMVARIABLESCAPITAL STOCKPRICETAXINPUTSREAL WAGESRETURNS TO SCALENOMINAL CAPITALPAYMENTSWEALTHCOMPUTER SYSTEMSRENTSECONOMIC ANALYSISTRENDSDRIVERSCOMMUNICATIONSLABOR MARKETCAPITAL INTENSITYMARGINAL PRODUCTSINVESTMENT BEHAVIORPRODUCTION STRUCTURECOSTSLABOR ALLOCATIONSDEVELOPMENT ECONOMICSEXTENSIVECAPITAL GAINSCONSTANT RETURNS TO SCALEBASE YEARPRODUCTIVITYBARRIERS TO ENTRYMARKETSNET EXPORTSORGANIZATIONSACCUMULATIONLABORELASTICITY OF SUBSTITUTIONCAPITAL STOCKSUTILITYINVENTORYGAINSREAL ESTATEECONOMIC RESEARCHUNEMPLOYMENTBLUE COLLAR OCCUPATIONSINVESTORSPRODUCTIVITY GROWTHDATA AVAILABILITYCONSUMPTIONFACTOR MARKETSGENERAL EQUILIBRIUMTECHNOLOGICAL CHANGEVALUE ADDEDTAX INCENTIVEAGGREGATE SUPPLYCAPITALWAGESINTERNATIONAL TRADEBARRIERSFUTUREVALUEPENSIONSCOMPETITIVENESSMACROECONOMICSOCCUPATIONSEXPENDITURESINCOMESSHARE OF CAPITALMEASUREMENTSHARESAFFILIATED ORGANIZATIONSASSETSBENCHMARKPRODUCTION FUNCTIONECONOMICSENDOGENOUS VARIABLESSECRETARIESOUTPUTMANAGEMENTFUNCTIONAL FORMSTRADEINVESTMENT RATESGDPGOODSINVESTORTHEORYINTANGIBLEGROWTH RATEINVESTMENTMACROECONOMIC ANALYSISSHARESUPPLYAFFILIATEDOPTIMAL ALLOCATIONSHARE CAPITALLABOR SUPPLYTAX POLICYRETURN ON INVESTMENTCOMMUNICATIONDEMOGRAPHICARBITRAGECOMMUNICATION TECHNOLOGYLABOR MARKETSSAFETYADVERSE EFFECTSPRICESDEVELOPMENT POLICYWorking PaperWorld Bank10.1596/1813-9450-7487