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A NOTE ON THE IMPLICATIONS OF AUTOMATION FOR ECONOMIC GROWTH AND THE LABOR SHARE

Published online by Cambridge University Press:  15 June 2017

Klaus Prettner
Klaus Prettner*
Affiliation:
University of Hohenheim
*
Address correspondence to: Klaus Prettner, University of Hohenheim, Institute of Economics Schloss, Osthof-West, 70593 Stuttgart, Germany; e-mail: klaus.prettner@uni-hohenheim.de.
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Abstract

We introduce automation into a standard model of capital accumulation and show that (i) there is the possibility of perpetual growth, even in the absence of technological progress; (ii) the long-run economic growth rate declines with population growth, which is consistent with the available empirical evidence; (iii) there is a unique share of savings diverted to automation that maximizes long-run growth; and (iv) automation explains around 14% of the observed decline of the labor share over the last decades in the United States.

Keywords

AutomationPerpetual Economic GrowthDeclining Labor ShareInequality
Type
Notes
Information
Macroeconomic Dynamics , Volume 23 , Issue 3 , April 2019 , pp. 1294 - 1301
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

I would like to thank the editor, William A. Barnett, an Associate Editor, an anonymous referee, Ana Abeliansky, Matthias Beulmann, Emanuel Gasteiger, Clemens Lankisch, Alexia Prskawetz, Johannes Schwarzer, and Holger Strulik for inspiring discussions and helpful comments. In particular, I would like to thank Franz X. Hof for numerous suggestions and for invaluable hints with respect to the mathematical properties of the underlying steady states of the model. I am grateful for the funding provided by the Faculty of Economics and Social Sciences at the University of Hohenheim within its research focus “Inequality and Economic Policy Analysis.”

References

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