Quantitative Effects of Two Kinds of Robots in a Neo-Classical Growth Model

Advances in artificial intelligence make possible widespread adoption of robots. How will the arrival of robots impact the growth of the economy, workers’ wages, consumption levels, and lifetime welfare? This dissertation attempts to answer this question by presenting a standard neoclassical growth model with two different kinds of robots, reflecting two ways that robots can affect the production process. The first chapter introduces additive robots while the second chapter introduces multiplicative robots. One key result is that even with zero population growth and no technical progress, the application of robots is enough to create a positive long-term trend growth. Motivated by the shrinking population in Japan, the third chapter studies the adoption of both types of robots. With homogeneous labor, there will be a shift of workers from jobs that can be substituted by additive robots to jobs that can be supported by multiplicative robots. This enables the economy to enjoy steady growth in real wages, consumption, and wealth. However, as the interest rate would gradually decline, the economy reaches a point, far in the future, where it is no longer profitable to adopt robots.