Perpetual growth, the labor share, and robots

Ö. Nomaler, B. Verspagen*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

The recent literature on the economic effects of machine learning, robotization and artificial intelligence suggests that there may be an upcoming wave of substitution of human labor by machines. We argue that these new technologies may lead to so-called perpetual growth, i.e. growth of per capita income with a non-progressing state of technology. We specify an exact parameter threshold beyond which perpetual growth emerges, and argue that ongoing technological change may bring the threshold in reach. We also show that in a state of perpetual growth, factor-eliminating technological progress reduces the role of labor in the production process and that this leads to a rising wage rate but ever-declining share of wage income. We present simulation experiments on several policy options to combat this inequality, including a universal basic income as well as an option in which workers become owners of ‘robots’.
Original languageEnglish
Pages (from-to)540-558
Number of pages19
JournalEconomics of Innovation and New Technology
Volume29
Issue number5
Early online date25 Jul 2019
DOIs
Publication statusPublished - 2020

JEL classifications

  • l64 - "Other Machinery; Business Equipment; Armaments"
  • o15 - "Economic Development: Human Resources; Human Development; Income Distribution; Migration"

Keywords

  • Perpetual economic growth
  • economic effects of robots
  • income distribution
  • labor share in income
  • BIASED TECHNOLOGICAL-CHANGE
  • TECHNICAL CHANGE
  • JOBS
  • INEQUALITY
  • TAXATION
  • SKILLS
  • FUTURE
  • EMPLOYMENT

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