Aurélien Eyquem will present "endogenous automation" (co-authored with Stéphane Auray).
 

The authors develop an open-economy model of endogenous automation with heterogeneous firms, endogenous business creation and tradability and labor reallocation. They match key trends in the U.S. economy, among which the rise in automation. The decline in the relative price of robots is a key factor leading to automation, and it affects automation non-linearly – the price of robots needs to fall enough to trigger automation. Running counterfactual simulations, other shocks are also found to affect the extent of automation resulting from a given declining path of robots price: negative shocks slow down automation while positive shocks accelerate it. Hence factors such as rising markups, rising entry costs, rising labor productivity or declining trade costs have welfare costs/gains on their own but also affect the economy, labor markets or business dynamism through their effects on the adoption of robots by firms.

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