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The implications of automation for economic growth and the labor share of income

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  • Prettner, Klaus

Abstract

We introduce automation into the standard Solovian 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 the long-run growth rate of the economy; (iv) the labor share declines with automation to an extent that fits to the observed pattern.

Suggested Citation

  • Prettner, Klaus, 2016. "The implications of automation for economic growth and the labor share of income," ECON WPS - Working Papers in Economic Theory and Policy 04/2016, TU Wien, Institute of Statistics and Mathematical Methods in Economics, Economics Research Unit.
    • Handle: RePEc:zbw:tuweco:042016
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    References listed on IDEAS

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    1. Orlando Gomes, 2021. "Growth theory under heterogeneous heuristic behavior," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 533-571, April.

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    More about this item

    Keywords

    automation; robots; machine learning; perpetual economic growth; declining labor share; inequality;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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