Automation, Growth, and Factor Shares in the Era of Population Aging

Irmen, Andreas

Reference : Automation, Growth, and Factor Shares in the Era of Population Aging


	Document type :	Scientific Presentations in Universities or Research Centers : Scientific presentation in universities or research centers
	Discipline(s) :	Business & economic sciences : Macroeconomics & monetary economics
	Focus Areas :	Sustainable Development
	To cite this reference:	http://hdl.handle.net/10993/49106

Title :	Automation, Growth, and Factor Shares in the Era of Population Aging
Language :	English
Author, co-author :	Irmen, Andreas [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
Publication date :	2021
Audience :	International
Event name :	Research Seminar, Economics Department, University of Namur
Event date :	Nov. 2021
Event organizer :	University of Namur
Event place (city) :	Namur
Event country :	Belgium
Keywords :	[en] Population aging ; Automation ; Factor shares ; Endogenous technical change ; Endogenous labor supply
Abstract :	[en] How does population aging affect economic growth and factor shares in times of increasingly automatable production processes? The present paper addresses this question in a new macroeconomic model of automation where competitive firms perform tasks to produce output. Tasks require labor and machines as inputs. New machines embody superior technological knowledge and substitute for labor in the performance of tasks. Automation is labor-augmenting in the reduced-form aggregate production function. If wages increase then the incentive to automate becomes stronger. Moreover, the labor share declines even though the aggregate production function is Cobb–Douglas. Population aging due to a higher longevity reduces automation in the short and promotes it in the long run. It boosts the growth rate of absolute and per-capita GDP in the short and the long run, lifts the labor share in the short and reduces it in the long run. Population aging due to a decline in fertility increases automation, reduces the growth rate of GDP, and lowers the labor share in the short and the long run. In the short run, it may or may not increase the growth rate of per-capita GDP, in the long run it unequivocally accelerates per-capita GDP growth.
Target :	Researchers
Permalink :	http://hdl.handle.net/10993/49106
Other URL :	https://ideas.repec.org/a/kap/jecgro/v26y2021i4d10.1007_s10887-021-09195-w.html

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