Moravec's Paradox and Restrepo's Model: Limits of AGI Automation in Growth
This addresses distributional impacts of AGI automation for economists and policymakers, but it is incremental as it builds on an existing model.
The paper extends an economic growth model under AGI by incorporating Moravec's Paradox, showing that when physical tasks are bottlenecks with high computational costs, the labor share of income stabilizes at a positive constant instead of zero, altering distributional outcomes while maintaining growth for cognitive-intensive economies.
This note extends Restrepo (2025)'s model of economic growth under AGI by incorporating Moravec's Paradox -the observation that tasks requiring sensorimotor skills remain computationally expensive relative to cognitive tasks. We partition the task space into cognitive and physical components with differential automation costs, allowing infinite costs for some physical bottlenecks. Our key result shows that when physical tasks constitute economic bottlenecks with sufficiently high (or infinite) computational requirements, the labor share of income converges to a positive constant in the finite-compute regime (rather than zero). This fundamentally alters the distributional implications of AGI while preserving the growth dynamics for cognitive-intensive economies.