Automation, New Technology, and Non-Homothetic Preferences

Clemens Struck () and Adnan Velic
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Clemens Struck: University College Dublin

Economic Papers from Trinity College Dublin, Economics Department

Abstract: This paper provides a microfoundation of the neoclassical growth theory. To rationalize a substantial share of labor in income despite ongoing automation of tasks, we present a simple model in which demand shifts toward goods of increasing sophistication along a vertically differentiated production structure. Automation of more advanced goods requires increasingly sophisticated capital which remains scarce along the growth path. This is why labor maintains a substantial share in income independent of core parameter assumptions. While our model features an entirely different mechanism, we show that its aggregate representation is the one of a neoclassical model with labor-augmenting technical change.

Keywords: Uzawa s theorem; automation; goods quality; structural change; reallocations; growth; non-homothetic preferences; hierarchical demand (search for similar items in EconPapers)
JEL-codes: E23 E25 J24 O14 O33 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2017-05
New Economics Papers: this item is included in nep-gro and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.tcd.ie/Economics/TEP/2017/TEP1217.pdf

Related works:
Working Paper: Automation, New Technology and Non-Homothetic Preferences (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep1217

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