O-Ring Automation (NBER Working Paper 34639)

Abstract

We study automation when tasks are quality complements rather than separable. Production requires numerous tasks whose qualities multiply as in an O-ring technology. A worker allocates a fixed endowment of time across the tasks performed; machines can replace tasks with given quality, and time is allocated across the remaining manual tasks. This “focus” mechanism generates three results. First, task-by-task substitution logic is incomplete because automating one task changes the return to automating others. Second, automation decisions are discrete and can require bundled adoption even when automation quality improves smoothly. Third, labour income can rise under partial automation because automation scales the value of remaining bottleneck tasks. These results imply that widely-used exposure indices, which aggregate task-level automation risk using linear formulas, will overstate displacement when tasks are complements. The relevant object is not average task exposure but the structure of bottlenecks and how automation reshapes worker time around them.

The authors' own abstract, copied from nber.org.

How to cite it

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Gans, J., & Goldfarb, A. (2026). O-Ring Automation (NBER Working Paper 34639). NBER Working Paper 34639. https://www.nber.org/system/files/working_papers/w34639/w34639.pdf

Gans, Joshua, et al. "O-Ring Automation (NBER Working Paper 34639)." NBER Working Paper 34639, 2026, https://www.nber.org/system/files/working_papers/w34639/w34639.pdf.

@article{gans2026oring,
  title = {O-Ring Automation (NBER Working Paper 34639)},
  author = {Joshua Gans and Avi Goldfarb},
  journal = {NBER Working Paper 34639},
  year = {2026},
  url = {https://www.nber.org/system/files/working_papers/w34639/w34639.pdf},
}

What it is

Joshua Gans and Avi Goldfarb's January 2026 NBER working paper modeling how automating some tasks in a chain of interdependent tasks changes the value of the remaining human work. Free PDF.

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