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Secular Trends and Technological Progress

Author

Listed:
  • Robin Döttling

    (Erasmus University Rotterdam)

  • Enrico Perotti

    (University of Amsterdam)

Abstract
We study the redistributive effects of a gradual productivity shift from tangible to intangible capital. Intangible asset creation relies on the commitment of skilled human capital. To ensure retention,firms reward innovators by deferred compensation, so funding demand by firms drops as the importance of intangible assets rises. Since human capital income is not tradable,the supply of investable assets falls and innovator rents rise.The general equilibrium effect is a fall in interest rates, while surplus savings are stored in higher asset valuations. This shift leads to increasing inequality and skewness in both the capital and labor income share.Rising house prices and wage inequality lead to higher household leverage.

Suggested Citation

  • Robin Döttling & Enrico Perotti, 2020. "Secular Trends and Technological Progress," ECONtribute Discussion Papers Series 006, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:006
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    Cited by:

    1. Yasmine van der Straten, 2023. "Flooded House or Underwater Mortgage? The Implications of Climate Change and Adaptation on Housing, Income & Wealth," Tinbergen Institute Discussion Papers 23-014/IV, Tinbergen Institute.
    2. Yasmine van der Straten & Enrico Perotti & Frederick van der Ploeg & Rick van der Ploeg, 2024. "Political Economy of Climate Change Adaptation," CESifo Working Paper Series 10961, CESifo.
    3. Robin Dottling, 2018. "Bank Capital Regulation in a Zero Interest Environment," Tinbergen Institute Discussion Papers 18-016/IV, Tinbergen Institute, revised 11 Oct 2019.
    4. Robin Döttling & Tomislav Ladika & Enrico Perotti, 2016. "The (Self-)Funding of Intangibles," Tinbergen Institute Discussion Papers 16-093/IV, Tinbergen Institute.
    5. Enrico Perotti & Magdelena Rola-Janicka, 2019. "Funding Shocks and Credit Quality," Tinbergen Institute Discussion Papers 19-060/IV, Tinbergen Institute.
    6. Jan Behringer, 2019. "Factor shares and the rise in corporate net lending," IMK Working Paper 202-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Perotti, Enrico & Döttling, Robin, 2019. "Redistributive Growth," CEPR Discussion Papers 13984, C.E.P.R. Discussion Papers.
    8. Claessens, Stijn, 2017. "Regulation and structural change in financial systems," CEPR Discussion Papers 11822, C.E.P.R. Discussion Papers.
    9. Jan Behringer, 2019. "Factor shares and the rise in corporate net lending," IMK Working Paper 202-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Lucia Granelli & Martin Habet & Guergana Stanoeva & Gaetano D’Adamo & Robert Gampfer, 2020. "Puzzles in Non-Financial Corporate Sector Savings across the G20," European Economy - Economic Briefs 063, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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    More about this item

    Keywords

    Intangible capital; skill-biased technological change; human capital; excess savings; house prices;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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