An aging population has been observed in Russia as in many other countries and an increase in the proportion of elderly people in the total population, accompanied by a decline in the share of people in the working age. These demographic shifts raise concerns about future economic growth, sustainability of the pension system and adequacy of the labor force. Elizaveta Martyanova, Researcher of the Mathematical Modeling of Economic Processes Department at the Gaidar Institute, shared results of the study on the impact of automation on the economy considering the UN demographic forecasts.
Automation refers to the use of hardware, software and algorithms to perform tasks previously implemented by humans, such as office programs that take over routine paperwork or industrial robots used in manufacturing to perform repetitive tasks. Such technologies can potentially compensate for labor shortages and increase average labor productivity.
According to the research (e.g., Acemoglu & Restrepo, 2022), population aging itself can drive automation. In particular, the decline in the number of middle-aged workers can result in accelerating adoption of robots and other technologies, especially in industries where such workers previously formed the bulk of the workforce. In this context, automation becomes not only a technological trend, but also an adaptation of the economy to a changing demographic structure.
However, automation brings not only growth potential but also redistribution risks. While it may raise average productivity, its benefits are unevenly distributed: real incomes of workers whose tasks can be replaced may decline, and the share of labor in GDP can reduce. These effects make it especially important to analyze the structural consequences of automation, not just its aggregate impact on the output.
The experts of the Mathematical Modeling of Economic Processes Department used in their study the numerical simulation modeling to assess the impact of automation on macroeconomic indicators, taking into account the UN demographic forecasts for Russia. The work is based on a structural model, in which automation is introduced as a replacement of routine labor.
Results of the analysis:
- The impact of automation on macroeconomic indicators depends on how the technological structure of the economy allows production to be adapted to automation. The easier it is to replace routine labor with machines, the more automation contributes to growth of average productivity. The more complex the implementation, the more limited the impact of automation: highly skilled labor remains a bottleneck.
- The potential for automation is limited not so much by the amount of routine labor that can be replaced, but by how easily it can be replaced. Even if a significant portion of tasks can be technically replaced, the actual increase in output may be small if automation is difficult to integrate into existing production processes.
- Worsening inequality. Automation increases average productivity but reduces the marginal productivity of workers performing routine tasks. This results in a widening income gap between skilled and unskilled workers, as the latter are more often engaged in routine work. Amid limited supply of highly skilled labor, automation can exacerbate structural shortages in the labor market.
Key findings:
- Automation does not contribute to promoting growth by default: the effect depends on the technological structure of production and the availability of highly skilled labor.
- The structure of the labor market becomes a determining factor: countries and regions marked by low levels of skills and limited mobility risk, facing rising inequality and technological stagnation.
- Training and retraining policies are a key lever of influence: the potential of automation can be realized with low elasticity of substitution only through growth of human capital.