IDEAS home Printed from https://ideas.repec.org/p/zbw/hohdps/082017.html
   My bibliography  Save this paper

The lost race against the machine: Automation, education and inequality in an R&D-based growth model

Author

Listed:
  • Prettner, Klaus
  • Strulik, Holger

Abstract

We analyze the effect of automation on economic growth and inequality in an R&D-based growth model with two types of labor: highskilled labor that is complementary to machines and low-skilled labor that is a substitute for machines. The model predicts that innovationdriven growth leads to increasing automation, an increasing skill premium, an increasing population share of graduates, increasing income and wealth inequality, a declining labor share, and (in an extension of the basic model) increasing unemployment. In contrast to Piketty's famous claim that faster economic growth reduces inequality, our theory predicts that faster economic growth promotes inequality.

Suggested Citation

  • Prettner, Klaus & Strulik, Holger, 2017. "The lost race against the machine: Automation, education and inequality in an R&D-based growth model," Hohenheim Discussion Papers in Business, Economics and Social Sciences 08-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    • Handle: RePEc:zbw:hohdps:082017
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/155785/1/882225766.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gasteiger, Emanuel & Prettner, Klaus, 2022. "Automation, Stagnation, And The Implications Of A Robot Tax," Macroeconomic Dynamics, Cambridge University Press, vol. 26(1), pages 218-249, January.
    2. Oded Galor & Omer Moav, 2002. "Natural Selection and the Origin of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1133-1191.
    3. Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December.
    4. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 255-283.
    5. Joao Guerreiro & Sergio Rebelo & Pedro Teles, 2022. "Should Robots Be Taxed? [Skills, Tasks and Technologies: Implications for Employment and Earnings]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 279-311.
    6. Holger Strulik & Klaus Prettner & Alexia Prskawetz, 2013. "The past and future of knowledge-based growth," Journal of Economic Growth, Springer, vol. 18(4), pages 411-437, December.
    7. Zeira, Joseph, 2005. "Machines as Engines of Growth," CEPR Discussion Papers 5429, C.E.P.R. Discussion Papers.
    8. Daron Acemoglu & David Autor, 2012. "What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 426-463, June.
    9. Peretto, Pietro F. & Seater, John J., 2013. "Factor-eliminating technical change," Journal of Monetary Economics, Elsevier, vol. 60(4), pages 459-473.
    10. Georg Graetz & Guy Michaels, 2018. "Robots at Work," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 753-768, December.
    11. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    12. Melanie Arntz & Terry Gregory & Ulrich Zierahn, 2016. "The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis," OECD Social, Employment and Migration Working Papers 189, OECD Publishing.
    13. Oded Galor, 2011. "Unified Growth Theory," Economics Books, Princeton University Press, edition 1, number 9477.
    14. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    15. Seth G. Benzell & Laurence J. Kotlikoff & Guillermo LaGarda & Jeffrey D. Sachs, 2015. "Robots Are Us: Some Economics of Human Replacement," NBER Working Papers 20941, National Bureau of Economic Research, Inc.
    16. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    17. Jeffrey D. Sachs & Laurence J. Kotlikoff, 2012. "Smart Machines and Long-Term Misery," NBER Working Papers 18629, National Bureau of Economic Research, Inc.
    18. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1245-1279.
    19. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    20. Prettner, Klaus, 2016. "The implications of automation for economic growth and the labor share," Hohenheim Discussion Papers in Business, Economics and Social Sciences 18-2016, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    21. Daron Acemoglu & Pascual Restrepo, 2017. "Robots and Jobs: Evidence from US Labor Markets," Boston University - Department of Economics - Working Papers Series dp-297, Boston University - Department of Economics.
    22. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    23. Abeliansky, Ana Lucia & Prettner, Klaus, 2017. "Automation and demographic change," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168215, Verein für Socialpolitik / German Economic Association.
    24. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    25. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    26. Peretto, Pietro F, 1998. "Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
    27. Charles I. Jones, 2002. "Sources of U.S. Economic Growth in a World of Ideas," American Economic Review, American Economic Association, vol. 92(1), pages 220-239, March.
    28. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293, Elsevier.
    29. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    30. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    31. Georg Graetz & Guy Michaels, 2015. "Robots at work: the impact on productivity and jobs," CentrePiece - The magazine for economic performance 447, Centre for Economic Performance, LSE.
    32. Abeliansky, Ana L. & Martínez-Zarzoso, Imnaculada & Prettner, Klaus, 2015. "The impact of 3D printing on trade and FDI," University of Göttingen Working Papers in Economics 262, University of Goettingen, Department of Economics.
    33. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
    34. Daron Acemoglu & Pascual Restrepo, 2016. "The Race Between Machine and Man: Implications of Technology for Growth, Factor Shares and Employment," NBER Working Papers 22252, National Bureau of Economic Research, Inc.
    35. Charles I. Jones, 2005. "The Shape of Production Functions and the Direction of Technical Change," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 517-549.
    36. Dalgaard, Carl-Johan & Kreiner, Claus Thustrup, 2001. "Is Declining Productivity Inevitable?," Journal of Economic Growth, Springer, vol. 6(3), pages 187-203, September.
    37. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
    38. Oded Galor, 2011. "Unified Growth Theory and Comparative Development," Rivista di Politica Economica, SIPI Spa, issue 2, pages 9-21, April-Jun.
    39. Prettner, Klaus, 2019. "A Note On The Implications Of Automation For Economic Growth And The Labor Share," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1294-1301, April.
    40. Jeffrey D. Sachs & Seth G. Benzell & Guillermo LaGarda, 2015. "Robots: Curse or Blessing? A Basic Framework," NBER Working Papers 21091, National Bureau of Economic Research, Inc.
    41. Christian Groth & Karl-Josef Koch & Thomas Steger, 2010. "When economic growth is less than exponential," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(2), pages 213-242, August.
    42. Holger Strulik & Jacob Weisdorf, 2008. "Population, food, and knowledge: a simple unified growth theory," Journal of Economic Growth, Springer, vol. 13(3), pages 195-216, September.
    43. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
    44. Prettner, Klaus & Strulik, Holger, 2017. "The lost race against the machine: Automation, education and inequality in an R&D-based growth model," Hohenheim Discussion Papers in Business, Economics and Social Sciences 08-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    45. Seth G. Benzell & Laurence J. Kotlikoff & Guillermo LaGarda & Jeffrey D. Sachs, 2015. "Robots Are Us: Some Economics of Human Replacement," NBER Working Papers 20941, National Bureau of Economic Research, Inc.
    46. Gasteiger, Emanuel & Prettner, Klaus, 2017. "A note on automation, stagnation, and the implications of a robot tax," Discussion Papers 2017/17, Free University Berlin, School of Business & Economics.
    47. Holger Strulik, 2005. "The Role of Human Capital and Population Growth in R&D‐based Models of Economic Growth," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 129-145, February.
    48. Prettner, Klaus, 2014. "The non-monotonous impact of population growth on economic prosperity," Economics Letters, Elsevier, vol. 124(1), pages 93-95.
    49. Gasteiger, Emanuel & Prettner, Klaus, 2017. "On the possibility of automation-induced stagnation," Hohenheim Discussion Papers in Business, Economics and Social Sciences 07-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Prettner, Klaus & Strulik, Holger, 2020. "Innovation, automation, and inequality: Policy challenges in the race against the machine," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 249-265.
    2. Lehmann-Hasemeyer, Sibylle H. & Prettner, Klaus & Tscheuschner, Paul, 2020. "The scientific revolution and its role in the transition to sustained economic growth," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    3. Abeliansky, Ana Lucia & Prettner, Klaus, 2017. "Automation and demographic change," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168215, Verein für Socialpolitik / German Economic Association.
    4. Dario Cords & Klaus Prettner, 2022. "Technological unemployment revisited: automation in a search and matching framework [The future of work: meeting the global challenges of demographic change and automation]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 115-135.
    5. Lehmann-Hasemeyer, Sibylle & Prettner, Klaus & Tscheuschner, Paul, 2023. "The scientific revolution and its implications for long-run economic development," World Development, Elsevier, vol. 168(C).
    6. Geiger, Niels & Prettner, Klaus & Schwarzer, Johannes A., 2018. "Automatisierung, Wachstum und Ungleichheit," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    7. Prettner, Klaus & Werner, Katharina, 2016. "Why it pays off to pay us well: The impact of basic research on economic growth and welfare," Research Policy, Elsevier, vol. 45(5), pages 1075-1090.
    8. Gasteiger, Emanuel & Prettner, Klaus, 2017. "A note on automation, stagnation, and the implications of a robot tax," Discussion Papers 2017/17, Free University Berlin, School of Business & Economics.
    9. Gasteiger, Emanuel & Prettner, Klaus, 2022. "Automation, Stagnation, And The Implications Of A Robot Tax," Macroeconomic Dynamics, Cambridge University Press, vol. 26(1), pages 218-249, January.
    10. Alberto Bucci & Klaus Prettner, 2020. "Endogenous education and the reversal in the relationship between fertility and economic growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(3), pages 1025-1068, July.
    11. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2019. "How can robots affect wage inequality?," Economic Modelling, Elsevier, vol. 81(C), pages 161-169.
    12. Werner, Katharina & Prettner, Klaus, 2014. "Human capital, basic research, and applied research: three dimensions of human knowledge and their differential growth effects," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100448, Verein für Socialpolitik / German Economic Association.
    13. Holger Strulik & Klaus Prettner & Alexia Prskawetz, 2013. "The past and future of knowledge-based growth," Journal of Economic Growth, Springer, vol. 18(4), pages 411-437, December.
    14. Luca Spinesi, 2022. "The Environmental Tax: Effects on Inequality and Growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(3), pages 529-572, July.
    15. Annarita BALDANZI & Alberto BUCCI & Klaus PRETTNER, 2016. "The Effects of Health Investments on Human Capital and R&D-Driven Economic Growth," Departmental Working Papers 2016-17, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    16. repec:got:cegedp:140 is not listed on IDEAS
    17. Baldanzi, Annarita & Bucci, Alberto & Prettner, Klaus, 2021. "Children’S Health, Human Capital Accumulation, And R&D-Based Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 25(3), pages 651-668, April.
    18. Naude, Wim, 2019. "The race against the robots and the fallacy of the giant cheesecake: Immediate and imagined impacts of artificial intelligence," MERIT Working Papers 2019-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Strulik, Holger & Werner, Katharina, 2014. "Elite education, mass education, and the transition to modern growth," University of Göttingen Working Papers in Economics 205, University of Goettingen, Department of Economics.
    20. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2017. "Robots and the skill premium: An automation-based explanation of wage inequality," Hohenheim Discussion Papers in Business, Economics and Social Sciences 29-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    21. Krenz, Astrid & Prettner, Klaus & Strulik, Holger, 2021. "Robots, reshoring, and the lot of low-skilled workers," European Economic Review, Elsevier, vol. 136(C).

    More about this item

    Keywords

    Automation; R&D-Based Growth; Inequality; Wealth Concentration;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:hohdps:082017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwhohde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.