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Friday, November 8, 2019 at 11:40am to 1:10pm
Uris Hall, 494
Dilip Mookherjee- Boston University
Abstract: We uncover a simple argument for long-term automation and decline in the labor share of national income, driven by capital accumulation rather than biased technical progress or rising markups. The argument hinges on a fundamental asymmetry across physical and human capital in modern economies. While physical capital can be scaled up for the same activity and accumulates in natural units, human capital accumulates principally via education and training that alters choice in to higher-skilled occupations, but—from the vantage point of a household or individual — cannot scale up the quantity of labor within a given occupation to an unlimited degree. This one asymmetry implies that in any growing economy, occupations must be progressively automated. Under a singularity condition on the technology of the robot-producing sector, we argue thatabasic "Kaldor fact" cannot hold: the share of capital in national income approaches 100%. At the same time, the displacement of human labor is gradual: the rising share of capital could coexist with rising real wages. Our main result holds for a world with no technical progress, and is robust to endogenous technical change provided that there are symmetric opportunities for technical progress in all inputs.