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Automation, Economic Growth, and Wage Inequality: A Comment on Afonso (2024)

Author

Listed:
  • Sasaki, Hiroaki
  • Shimizu, Kenji
  • Ishihara, Yousuke

Abstract

This study critically reviews Afonso (2024), who proposes a model of economic growth that considers automation capital, traditional capital, skilled labor, and unskilled labor. In his definition of a balanced growth path, the progress of automation makes both the ratio of skilled labor to all labor and the skill premium asymptotically approach zero in the long run. Eventually, the economic growth rate becomes zero, which contradicts his conclusion. In contrast, if we correct the definition of the balanced growth path, the ratio of skilled labor to all labor asymptotically approaches unity in the long run, and the skill premium diverges to infinity. In this case, the long-run growth rate of per-capita output is equal to the growth rate obtained from Jones’s (1995) semi-endogenous growth model.

Suggested Citation

  • Sasaki, Hiroaki & Shimizu, Kenji & Ishihara, Yousuke, 2025. "Automation, Economic Growth, and Wage Inequality: A Comment on Afonso (2024)," MPRA Paper 124420, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124420
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    More about this item

    Keywords

    automation; growth; income distribution; skill premium;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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