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Rise of the Machines Redux – Education, Technological Transition and Long-run Growth

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  • Ahmed S. Rahman

    (United States Naval Academy)

Abstract

We develop a growth model with over-lapping generations that endogenizes skill acquisition and two forms of technical change, one that automates existing production processes, and one that invents new production processes. The former kind of technological change obso- letes certain middle-range skills; the latter has the potential to increase such skills. This work suggests that 1) early industrialization generates greater automation; 2) employment polarization caused by automation also fosters education polarization, potentially affecting future growth; 3) the economy naturally transitions from automation to innovation; and 4) such a transition today will lessen wage inequality but may not bring back mid-skilled jobs as it had historically.

Suggested Citation

  • Ahmed S. Rahman, 2017. "Rise of the Machines Redux – Education, Technological Transition and Long-run Growth," Departmental Working Papers 61, United States Naval Academy Department of Economics.
    • Handle: RePEc:usn:usnawp:61
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    File URL: http://www.usna.edu/EconDept/RePEc/usn/wp/usnawp61.pdf
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