The Pasinetti theorem in a task‐based model of automation

Abstract

AbstractWe 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.