Automation, Economic Growth, and Wage Inequality: A Comment on Afonso (2024)

This study critically reviews Afonso (2024), who proposes a model of economic growth that considers automation capital, traditional capital, skilled labor, and unskilled labor. In his definition of a balanced growth path, the progress of automation makes both the ratio of skilled labor to all labor and the skill premium asymptotically approach zero in the long run. Eventually, the economic growth rate becomes zero, which contradicts his conclusion. In contrast, if we correct the definition of the balanced growth path, the ratio of skilled labor to all labor asymptotically approaches unity in the long run, and the skill premium diverges to infinity. In this case, the long-run growth rate of per-capita output is equal to the growth rate obtained from Jones’s (1995) semi-endogenous growth model.