Economic dynamics in the presence of general automation

A relatively simple state-space model of a 2-sector economy as general-purpose task automation technology is introduced.

If all work can be automated, the economy can continue to grow even as wages drop below subsistence levels and an increasing fraction of the population is excluded from economic participation.

Bad times.

So, it's time to get deliberate about how we will close the loop on economies where GDP may tell us less about the wellbeing of the population served than in prior decades of technology development.

This is a notional model and the current parameters are not anchored to real-world economic data. With p.mu set to zero, we see an economy with steady labor-pool participation and continued GDP growth driven by re-investment and transition between low-tech and high-tech labor sectors.

If a probability of task automation is increased (p.mu = 0.55), then portions of the high tech workforce are excluded and wages drop below subsistence levels, resulting in lower population participation in the workforce even as GDP continues to go gangbusters:

If I get a chance to play with this more, I hope to anchor parameters to real world values and potentially add more states to give a more comprehensive labor breakdown than simply high-tech/low-tech.