Data-Driven Automation

We build a dynamic model of data-driven automation in which data (i) is heterogeneous and taskspecific; (ii) accumulates endogenously as a byproduct of economic activity; and (iii) exhibits spillovers such that data generated by one task can augment the productivity of another.Along the transition path of automation, data plays a dual role in simultaneously augmenting the productivity of already-automated tasks and expanding the automation frontier.We derive tight conditions for the economy to be partially versus fully automated in the long-run.In the latter case, automation exhibits rich short-run dynamics that depend on the pattern of data spillovers but is always slow in the long-run: the share of tasks produced by labor decays asymptotically as a power law in time.We show that the economy is generically inefficient and analyze how a planner optimally tilts the direction of data accumulation.With endogenous capital accumulation, data-driven automation generates explosive growth but stagnant long-run wages.