Secular Trends and Technological Progress

41 Pages Posted: 7 Jul 2017 Last revised: 2 Jun 2020

See all articles by Robin Döttling

Robin Döttling

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Enrico C. Perotti

University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR); Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2019

Abstract

We study the redistributive effects of a gradual productivity shift from tangible to intangible capital. Intangible asset creation relies on the commitment of skilled human capital. To ensure retention, firms reward innovators by deferred compensation, so funding demand by firms drops as the importance of intangible assets rises. Since human capital income is not tradable, the supply of investable assets falls and innovator rents rise. The general equilibrium effect is a fall in interest rates, while surplus savings are stored in higher asset valuations. This shift leads to increasing inequality and skewness in both the capital and labor income share. Rising house prices and wage inequality lead to higher household leverage.

Keywords: Intangible capital, skill-biased technological change, human capital, excess savings, house prices

JEL Classification: D33, E22, G32

Suggested Citation

Döttling, Robin and Perotti, Enrico C., Secular Trends and Technological Progress (June 1, 2019). Available at SSRN: https://ssrn.com/abstract=2996998 or http://dx.doi.org/10.2139/ssrn.2996998

Robin Döttling

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-46
3000 DR Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Enrico C. Perotti (Contact Author)

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4159 (Phone)
+31 20 525 5285 (Fax)

HOME PAGE: http://www.fee.uva.nl/fm/people/pero.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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