This paper develops an assignment model of automation. Each of a continuum of tasks of variable complexity is assigned to either capital or one of a continuum of labor skills. The researchers characterize conditions for interior automation, whereby tasks of intermediate complexity are performed by capital. Interior automation arises when low-skill wages are low and effective cost of capital in low-complexity tasks is high. Minimum wages make interior automation less likely. Higher capital productivity causes employment and wage polarization, changes the skill premium non-monotonically, and reduces the real wage of workers with comparative advantage profiles close to that of capital.
Labor Market Consequences of Technological Change
Journal Articles
Automation and Polarization
Journal of Political Economy
January 2026