David Autor on the Future of Work and Polanyi's Paradox
EconTalk
00:00
Are You Directly Complated Versus Substituted?
Adam Smith was mostly focused on the division of labor as a way of increasing productivity. I don't think he really fully appreciated this role of capital augmenting labor, however. A second factor that affects how that automation affects your earnings and in the given activity is the elasticity of final demand. If we get really productive at something, but there's a fixed amount of it that people want, then eventually they just buy less and less of it.
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