Not logged in.
Quick Search - Contribution
|Title||The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality|
|Institution||University of Zurich|
|Series Name||CEPR Discussion Paper|
|Abstract Text||We construct an endogenous growth model with automation (the introduction of machines which replace low-skill labor) and horizontal innovation. The economy follows three phases. First, low-skill wages are low, which induces little automation, and income inequality and labor’s share of GDP are constant. Second, as low-skill wages increase, automation increases which reduces the labor share, increases the skill premium and may decrease future low-skill wages. Finally, the economy moves toward a steady state, where low-skill wages grow but at a lower rate than high-skill wages. The model is quantitatively consistent with the US labor market experience since the 1960s.|
|PDF File||Download from ZORA|
EP3 XML (ZORA)