Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/198588
Authors: 
Struck, Clemens C.
Velic, Adnan
Year of Publication: 
2019
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series WP19/12
Abstract: 
To rationalize a substantial income share of labor despite progressive task automation over the centuries, we present a simple model in which demand moves along a vertically differentiated production structure toward goods of increasing sophistication. Automation of more sophisticated goods requires capital of increasing quality. Quality capital remains scarce along the growth path. This is why labor keeps up a substantial fraction of income. Real capital, however, that is capital measured in units of the quality of some base year, becomes abundant relative to labor. While our model features an entirely different mechanism, we show that its aggregate representation is the one of a neoclassical growth model with labor-augmenting technical change.
Subjects: 
Uzawa's theorem
automation
goods quality
structural change
reallocations
growth
nonhomothetic preferences
hierarchical demand
JEL: 
E23
E24
E25
J23
J24
O14
O31
O33
Document Type: 
Working Paper

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