Growth, Automation and the Long Run Share of Labor

39 Pages Posted: 22 Jan 2020

See all articles by Debraj Ray

Debraj Ray

New York University (NYU) - Department of Economics; Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

Dilip Mookherjee

Boston University - Department of Economics

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Date Written: January 2020

Abstract

We provide an argument for long-term automation and decline in the labor income share, driven by capital accumulation rather than technical progress or rising markups. We emphasize a fundamental asymmetry across physical and human capital. An individual can indefinitely replicate her claims on the former, but — after a point — her human endowment cannot be cloned and rescaled in the same way. Then ongoing capital accumulation gives rise to progressive automation, and the share of labor income converges to zero. The displacement of human labor is gradual, and real wages could rise indefinitely. The results extend to endogenous technical change.

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Suggested Citation

Ray, Debraj and Mookherjee, Dilip, Growth, Automation and the Long Run Share of Labor (January 2020). NBER Working Paper No. w26658, Available at SSRN: https://ssrn.com/abstract=3522307

Debraj Ray (Contact Author)

New York University (NYU) - Department of Economics ( email )

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Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

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Dilip Mookherjee

Boston University - Department of Economics ( email )

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