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On the possibility of automation-induced stagnation

Author

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  • Gasteiger, Emanuel
  • Prettner, Klaus

Abstract

We analyze the long-run growth effects of automation in the standard overlap- ping generations framework. We show that, in contrast to other neoclassical models of capital accumulation, automation does not promote growth but induces economic stagnation. The reason is that automation suppresses wages, which are the only source of investment in the overlapping generations framework.

Suggested Citation

  • 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.
    • Handle: RePEc:zbw:hohdps:072017
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    References listed on IDEAS

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    Cited by:

    1. Óscar Afonso & Elena Sochirca & Pedro Cunha Neves, 2022. "Robots and Humans: The Role of Fiscal and Monetary Policies in an Endogenous Growth Model," CEF.UP Working Papers 2201, Universidade do Porto, Faculdade de Economia do Porto.
    2. Wright, Scott A. & Schultz, Ainslie E., 2018. "The rising tide of artificial intelligence and business automation: Developing an ethical framework," Business Horizons, Elsevier, vol. 61(6), pages 823-832.
    3. Prettner, Klaus & Strulik, Holger, 2017. "The lost race against the machine: Automation, education, and inequality in an R&D-based growth model," University of Göttingen Working Papers in Economics 329, University of Goettingen, Department of Economics.

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    Keywords

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    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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