LABRST 2M03 Chapter Notes - Chapter 1: Investment Goods, Airbnb, Thomas Piketty
Course CodeLABRST 2M03
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Frei and Osborne, Technology at Work, Parts 1 & 2 (pp.7-22)
The Changing Nature of Innovation
• The 21st century has already brought remarkable technological achievements
• Many countries have witnessed significant declines in labour’s share of gross domestic
• This decline can be explained by the decrease in the relative price of investment goods,
which in turn is driven by advances in computer-driven technologies, leading companies to
substitute labour for capital in production.
The Future of Innovation: Slowdown or Showdown?
• In Capital in the Twenty-first Century, Thomas Piketty argues that labour’s share of GDP
tends to fall when the rate of return on capital is greater than the rate of economic growth.
• As a result, a wealth gap will emerge between owners of capital and those who rely on their
The Digital Age: Why This Time is Different
• There is reason to be concerned that we are experiencing an era in which innovation
benefits the few rather than the many. Most individuals are consumers and producers, so
new technologies will have an impact on people’s living standards in both capacities,
positively or negatively.
• An important feature of the Industrial Revolution was that it benefited people both as
producers and consumers over the long-run. In particular, the adoption of the assembly line
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