Automation, new technology and non-homothetic preferences

Arbeitspapier

To rationalize a substantial income share of labor despite progressive task automation over the centuries, we present a simple model in which demand moves along a vertically differentiated production structure toward goods of increasing sophistication. Automation of more sophisticated goods requires capital of increasing quality. Quality capital remains scarce along the growth path. This is why labor keeps up a substantial fraction of income. Real capital, however, that is capital measured in units of the quality of some base year, becomes abundant relative to labor. While our model features an entirely different mechanism, we show that its aggregate representation is the one of a neoclassical growth model with labor-augmenting technical change.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: UCD Centre for Economic Research Working Paper Series ; No. WP19/12

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Production ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Aggregate Factor Income Distribution ; Labor Demand ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Industrialization; Manufacturing and Service Industries; Choice of Technology ; Innovation and Invention: Processes and Incentives ; Technological Change: Choices and Consequences; Diffusion Processes
• Subject: Uzawa's theorem ; automation ; goods quality ; structural change ; reallocations ; growth ; nonhomothetic preferences ; hierarchical demand

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Struck, Clemens C. ; Velic, Adnan
• Event: Veröffentlichung
• (who): University College Dublin, UCD School of Economics
• (where): Dublin
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/198588
• Last update: 10.03.2025, 11:43 AM CET