Automation, Human Capital and Welfare: The Stochastic Uzawa-Lucas Approach
نویسنده
چکیده
Human capital, in the form of embodied knowledge or skills, is under threat of automation. To examine the effect of it on a macroeconomy, I develop the Uzawa-Lucas model in which the accumulation of human capital follows the stochastic process. With two equality constraints, the closed-form solution gets obtainable. It shows that increase in uncertainty about the human capital accumulation reduces the welfare of households and causes human capital contraction. Moreover, optimal consumption appears to depend on efficiency of human capital, not its stock.
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