Working Paper: CEPR ID: DP14286
Authors: Dilip Mookherjee; Debraj Ray
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.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Capital accumulation (E22) | Progressive automation (O31) |
| Progressive automation (O31) | Labor income share converging to zero (J39) |
| Capital accumulation (E22) | Labor income share converging to zero (J39) |
| Progressive automation (O31) | Displacement of human labor (F66) |
| Displacement of human labor (F66) | Real wages potentially rising indefinitely (J39) |