Growth in the age of automation: Foundations of a theoretical framework

Abstract

The replacement of humans by machines in the development of a wide array of productive tasks is changing the economic landscape. Mutations on the structure of employment, widening income gaps, and uncertain effects over growth are some of the worries currently in the mind of economists. This article develops the foundations of a neoclassical growth model that puts into perspective the impact of automation over the aggregate economy. In particular, efficiency gains propelled by the current wave of innovation are confronted with the associated loss of jobs and with the potential social unrest and anxiety that the substitution of labor by robots brings. The strength of each effect determines transition paths and steady-state results.