Abstract
I explore the effects of capital-augmenting technical change (CATC) in a task-based production setting where untapped automation opportunities exist. I contribute to the literature by showing analytically that CATC is a convenient modeling approach to automation, of which the labor market implications match the empirical literature. In my setting, CATC lowers the labor share of income even in the face of strong capital–labor complementarity. The intuitive explanation for this result is that the standard effect of CATC is more than fully offset by a contraction in the set of non-automated tasks, executed by labor. Furthermore, I show that CATC increases the wage rate unambiguously.
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