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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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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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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Avner Ahituv (2001) Be fruitful or multiply: On the interplay between fertility and economic development. Journal of Population Economics 14, 5171.

Dierk Herzer , Holger Strulik , and Sebastian Vollmer (2012) The long-run determinants of fertility: One century of demographic change 1900-1999. Journal of Economic Growth 17, 357385.

Charles I. Jones (1995) R&D-based models of economic growth. Journal of Political Economy 103, 759783.

Loukas Karabarbounis and Brent Neiman (2014) The global decline of the labor share. Quarterly Journal of Economics 129, 61103.

Thomas Piketty (2014) Capital in the Twenty-First Century. Cambridge, MA, USA: The Belknap Press of Harvard University Press.

Erling Steigum (2011) Robotics and growth. In Hamid Beladi and Kwan Choi (ed.), Frontiers of Economics and Globalization: Economic Growth and Development, pp. 543557. Bingley, West Yorkshire, England: Emerald Group.

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