Continuations

Having examined the impact of computers on wages the logical next question to ask is what this means for the returns on capital. Here is the TL;DR version: higher returns in the short run and lower returns in the long run. We are already well into this short run period and we are beginning to see the forces that will shape the long run. Let’s start with the short run. As we are substituting computers (which I mean broadly here including robots) for labor we are increasing the importance of ca...

On Saturday, Susan and I taught our one day workshop called Learn To Commit for the second time. The event was organized by Makaela Kingsley from the Petricelli Center for Social Entrepreneurship. We had a terrific group of undergraduate women attend who showed up well prepared and were super engaged throughout the day. Having now taught this twice we will adjust the curriculum based on the lessons learned which includeBuilding your own personal web site is highly motivating. It is surprising...

As I argued in my last post, there is good reason to believe that computers are substitutes for labor in general. Their apparent complementarity with skilled labor was the result of substituting skilled labor for unskilled labor rather than being based on a fundamental technological complementarity. The logical next question is what this means for wages. To answer that we need a bit more theory first. How wages get determined has been hotly contested over the years but I think the basic answe...

I posted a few days ago revisiting the inflation versus deflation argument. I provided a very brief comment there on Then yesterday Marc Andreessen asked on Twitter about the arguments linking computers to deflation. I am sure others have data on this but here are some of the different vectors that I see: 1. Moore’s law – this is the obvious one. We have had incredible progress in hardware that has driven down the price of computers and anything else that requires computation. 2. Automation –...

Earlier this week I posted about production functions which must have felt very dry but I promise there is a payoff (terms defined in the previous post are linked). Let’s consider a production function with three factors: computers, skilled labor and unskilled labor. What we are interested in thinking about is what happens as the price of computers drops (since that’s what we have obviously observed dramatically over the last decades). Much of the literature seems to suggest that skilled labo...