The future of growth and distribution in an economy with automation technology

This study aims to investigate the effects of automation technology on income inequality with a growth model based on the automation capital approach. Our model adds automation capital as a third production factor alongside labor and traditional capital. We employ an infinite-horizon dynamic optimization model for capitalists and a two-period overlapping generations model for workers. We investigate the long-run dynamics of the input ratios of the production factors, income distribution, income inequality, and per capita output growth. Depending on the relative sizes of the discount factors of capitalists and workers, various dynamics are produced.