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

  • Klaus Prettner (a1)
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.

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Corresponding author
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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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.”

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References
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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