Growth, automation, and the long run share of labor
Files
First author draft
Date
2021
Authors
Ray, Debraj
Mookherjee, Dilip
Version
First author draft
OA Version
Citation
D. Ray and D. Mookherjee. 2021. "Growth, automation, and the long run share of labor." Review of Economic Dynamics, https://doi.org/10.1016/j.red.2021.09.003
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.