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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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    Cited by:

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    2. Cui, Huijie & Liang, Shangkun & Xu, Canyu & Junli, Yu, 2024. "Robots and analyst forecast precision: Evidence from Chinese manufacturing," International Review of Financial Analysis, Elsevier, vol. 94(C).
    3. Sholler, Dan & MacInnes, Ian, 2022. "The economic impact of AI on employment and income disparities," 31st European Regional ITS Conference, Gothenburg 2022: Reining in Digital Platforms? Challenging monopolies, promoting competition and developing regulatory regimes 265669, International Telecommunications Society (ITS).

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    Keywords

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    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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