Will smart machines do to humans what the internal combustion engine did to horses – make them obsolete? If so, can putting people out of work or, at least, good work leave them unable to buy what smart machines produce? Our model's answer is yes. Over time and under the right conditions,...

Will smart machines replace humans like the internal combustion engine replaced horses? If so, can putting people out of work, or at least out of good work, also put the economy out of business? Our model says yes. Under the right conditions, more supply produces, over time, less demand as the...

In a seminal paper Graetz and Michaels (2018) find that robots increase labor productivity and TFP, lower output prices and adversely affect the employment share of lowskilled labor. We demonstrate that these effects are heavily influenced by the sample composition and argue that focusing on...