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Growth, Automation and the Long-Run Share of Labor

Author

Listed:
  • Dilip Mookherjee

    (Boston University)

  • Debraj Ray

    (New York University)

Abstract

We study the long run implications of workplace automation induced by capital accumulation. We describe a minimal set of sufficient conditions for sustained growth, along with a declining labor share of income in the long run: (i) a basic asymmetry between physical and human capital; (ii) the technical possibility of automation in each sector; (ii) a self-replication condition on the production function for robot services; (iv) asymptotic homotheticity (more generally neutrality) of demand, and (v) a minimal degree of patience or intergenerational altruism among a fraction of households. However, the displacement of human labor is gradual, and absolute real wages could rise indefinitely. The results obtain in the absence of any technical progress; they extend to endogenous technical progress even if such progress is not biased ex ante in favor of automation. (Copyright: Elsevier)

Suggested Citation

  • Dilip Mookherjee & Debraj Ray, 2022. "Growth, Automation and the Long-Run Share of Labor," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 1-26, October.
    • Handle: RePEc:red:issued:21-148
    DOI: 10.1016/j.red.2021.09.003
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    2. Dreger, Christian & Fourné, Marius & Holtemöller, Oliver, 2023. "Globalization, productivity growth, and labor compensation," IWH Discussion Papers 7/2022, Halle Institute for Economic Research (IWH), revised 2023.
    3. Cao, Sean & Jiang, Wei & Wang, Junbo & Yang, Baozhong, 2024. "From Man vs. Machine to Man + Machine: The art and AI of stock analyses," Journal of Financial Economics, Elsevier, vol. 160(C).
    4. Hideki Nakamura & Joseph Zeira, 2024. "Automation and unemployment: help is on the way," Journal of Economic Growth, Springer, vol. 29(2), pages 215-250, June.
    5. Yuki, Kazuhiro, 2012. "Mechanization, task assignment, and inequality," MPRA Paper 37754, University Library of Munich, Germany.
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    7. Cauvel, Michael & Pacitti, Aaron, 2022. "Bargaining power, structural change, and the falling U.S. labor share," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 512-530.
    8. Leone Julián & Cascio Jorge Lo, 2020. "Income gaps: Education and inequality," Economics and Business Review, Sciendo, vol. 6(4), pages 27-50, December.
    9. Yang, Jia & Pei, Yu & Qiang, Wei, 2024. "The impact of automation on human capital investment," Finance Research Letters, Elsevier, vol. 62(PB).
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    More about this item

    Keywords

    Automation; Inequality; Factor shares; Human capital; Technical progress;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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