Automation and the fall and rise of the servant economy

Krenz, Astrid and Strulik, Holger (2025) Automation and the fall and rise of the servant economy. European Economic Review, 172. ISSN 0014-2921

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Abstract

We develop a macroeconomic theory of the division of household tasks between servants and own work and how it is affected by automation in households and firms. We calibrate the model for the U.S. and apply it to explain the historical development of household time use and the distribution of household tasks from 1900 to 2020. The economy is populated by high-skilled and low-skilled households and household tasks are performed by own work, machines, or servants. For the period 1900–1960, innovations in household automation motivate the decline of the servant economy and the creation of new household tasks motivates an almost constant division of household time between wage work and domestic work. For the period 1960–2020, innovations in firm automation and the implied increase of the skill premium explain the return of the servant economy. We use counterfactual historical experiments to assess the role of automation, the creation of new household tasks, and the gig economy for the division of household time and tasks. We provide supporting evidence for the relation between automation and inequality, and for inequality as a driver of the return of the servant economy in a regional panel of U.S. metropolitan statistical areas for the period 2005–2020.

Item Type:	Article
Additional Information:	© 2024 The Authors
Divisions:	Data Science Institute
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions
JEL classification:	D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation) J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General
Date Deposited:	07 Jan 2025 10:03
Last Modified:	07 Jan 2025 10:03
URI:	http://eprints.lse.ac.uk/id/eprint/126593

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