The Pasinetti theorem in a task-based model of automation

Abstract

We integrate the notion of task-based automation into a two-class model and study the interaction between endogenous automation and the wealth distribution between capitalists and workers. We find that, as the economy becomes more automated, the possibility of a sustained capitalist class naturally arises. We show that capital-augmenting technical progress induces automation and that it can generate a historical path from the dual equilibrium (where workers own all wealth), over the Pasinetti equilibrium (where capitalists own some wealth) to the anti-dual outcome (where capitalists own all wealth). The model's implications are related to Piketty's account of rising wealth inequality.