DP14092 From Secular Stagnation to Robocalypse? Implications of Demographic and Technological Changes

Author(s): Henrique S. Basso, Juan F Jimeno
Publication Date: November 2019
Keyword(s): automation, Innovation, Population Ageing
JEL(s): J11, O31, O40
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14092

Demographic changes and a new wave of innovation and automation are two main structural trends shaping the macroeconomy in the next decades. We present a general equilibrium model with a tractable life-cycle structure that allows the investigation of the main transmission mechanisms by which demography and technology affect economic growth. Due to a trade-off between innovation and automation, lower fertility and population ageing lead to a reduction in GDP per capita growth and the labour income share. Assuming different labour market configurations and scenarios for the integration of robots in economic activity only partially compensate for these effects.