Mechanization, Task Assignment, and Inequality

Mechanization (or automation) - the replacement by machines of humans (and animals) engaged in production tasks- has proceeded continuously since the Industrial Revolution and seems to have accelerated recently due to the rapid advancement of information technology. This paper examines interactions among long-run trends of mechanization, shifts of tasks humans perform, and earnings levels and inequality. Specifically, the paper develops a Ricardian model of task assignment and analyzes how improvements of productivities of machines and an increase in the relative supply of skilled workers affect task assignment (which factor performs which task), earnings levels and inequality, and aggregate output. The model succeeds in capturing the great majority of the long-run trends. The paper also explores possible future trends of the variables when information technology continues to grow rapidly