Growth, Automation and the Long Run Share of Labor
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.
Mookherjee thanks the Department of Economics at NYU for hosting his visit in Fall 2017 when this project was started. Ray acknowledges funding from the National Science Foundation under grant SES-1851758. We are grateful to Pascual Restrepo for useful conversations, and Erik Madsen for a proof of Lemma A2 in the Supplementary Appendix. Author names are in random order. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Debraj Ray & Dilip Mookherjee, 2021. "Growth, automation, and the long-run share of labor," Review of Economic Dynamics, .