Automation and Rent Dissipation: Implications for Wages, Inequality, and Productivity

Daron Acemoglu and Pascal Restrepo uncover how automation disproportionately targets tasks that pay workers above-market wages, eroding those rents and amplifying wage losses for affected workers. Using U.S. data from 1980 to 2016, they show that this “rent dissipation” not only reduces wage dispersion within exposed groups but also offsets much of automation’s potential productivity gains. The research finds that automation explains over half of the rise in between-group inequality since 1980, with rent dissipation playing a significant role. Together, these results highlight an important channel through which automation shapes inequality and overall economic efficiency.