The advent of artificial intelligence is changing the task allocation of workers

and machines in firms’ production processes with potentially wide ranging effects

on workers and firms. We develop an agent-based simulation framework to investigate

the consequences of different types of automation for industry output, the

wage distribution, the labor share, and industry dynamics. It is shown how the

competitiveness of markets, in particular barriers to entry, changes the effects that

automation has on various outcome variables, and to which extent heterogeneous

workers with distinct general skill endowments and heterogeneous firms featuring

distinct wage offer rules affect the channels via which automation changes market

outcomes.