| By: |
Arthur Jacobs;
Freddy Heylen (-) |
| Abstract: |
We construct and calibrate an overlapping generations model incorporating
demographic change and the possibility to automate the production process to
test the hypothesis put forward by Acemoglu and Restrepo (2017). In line with
their hypothesis, we find that ageing is a powerful force stimulating the
adoption of automation technologies in OECD economies. Ageing-induced
automation is found to soften the negative effects of labour scarcity and
rising old-age dependency rates on per capita growth, but the compensation is
incomplete. One important reason is that automated tasks are far from perfect
substitutes for tasks executed by human labour. A second reason is that
ageing-induced automation reduces the intensity of positive behavioural
reactions to ageing in the form of retiring later and investing more in human
capital. Moreover, the partial compensation comes at the price of rising wage
and welfare inequality between individuals of different innate ability level
and a fall in the net labour share of income. Compared to existing literature,
we pay special attention to the theoretical and empirical foundations of the
modelling of automation. Theoretically, our work is the first one testing this
hypothesis that relates the approach to automation rigorously to the state-of
the-art conception by Acemoglu and Restrepo (2018a; 2018b). Empirically, we
tested and largely confirmed the validity of our approach and calibration by
comparing model predictions of (changes in) automation density to actual data
on robotization in a cross-country fashion. |
| Keywords: |
Automation, Demographic change, Secular stagnation, Overlapping generations model, Robotics, Factor shares |
| JEL: |
E22 E27 J11 J23 J24 J31 |
| Date: |
2021–10 |
| URL: |
http://d.repec.org/n?u=RePEc:rug:rugwps:21/1030&r= |