The effects of technological development on the labor share of national income

Özgür Ergül and Türkmen Göksel

Economic Modelling, 2020, vol. 87, issue C, 158-171

Abstract: In this article, we analyze the effects of increasing automation in production processes on the labor share of national income. For the analyses, we use the DSGE model which contains both the physical capital and the human capital accumulation equations. We improve the model by defining productivity variables for both investment-specific technology and educational activities. In all simulations of the model except base scenario, we give more positive shock to the investment-specific technology compared to the educational activities. In each new simulation, we augment the difference between the shocks to determine the effects of increasing automation on the labor share of national income. The results show that increasing the shock difference decreases the labor share of national income, and this confirms the decline in the labor share of national income in both developed and developing countries since the 1980s.

Keywords: Labor share of national income; Investment-specific technological change; DSGE models; Human capital (search for similar items in EconPapers)
JEL-codes: E22 E24 E25 J24 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:87:y:2020:i:c:p:158-171

DOI: 10.1016/j.econmod.2019.07.015

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