Automation, New Technology and Non-Homothetic Preferences

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Title: Automation, New Technology and Non-Homothetic Preferences
Authors: Struck, Clemens C.Velic, Adnan
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Date: May-2019
Online since: 2019-05-16T10:08:10Z
Abstract: 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.
Type of material: Working Paper
Publisher: University College Dublin School of Economics
Start page: 1
End page: 18
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP19/12
Copyright (published version): 2019 the Authors
Keywords: Uzawa's theoremAutomationGoods qualityStructural changeReallocationsGrowthNonhomothetic preferencesHierarchical demand
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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