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Automation, New Technology and Non-Homothetic Preferences
Author(s)
Date Issued
2019-05
Date Available
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
UCD Centre for Economic Research Working Paper Series
WP19/12
Copyright (Published Version)
2019 the Authors
Classification
E23
E24
E25
J23
J24
O14
O31
O33
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
File(s)
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Name
WP19_12.pdf
Size
547.16 KB
Format
Adobe PDF
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