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How can robots affect wage inequality?

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  • Lankisch, Clemens
  • Prettner, Klaus
  • Prskawetz, Alexia

Abstract

We explain the simultaneous presence of i) increasing per capita output, ii) declining real wages of low-skilled workers, and iii) a rising wage premium of higher education within a model of economic growth in the age of automation. The theoretical implications are consistent with the data for the United States since the 1970s. Thus, automation contributes towards our understanding of the driving forces of rising inequality. The immediate policy conclusion is that investments in higher education can help to soften the negative effects of automation.

Suggested Citation

  • Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2019. "How can robots affect wage inequality?," Economic Modelling, Elsevier, vol. 81(C), pages 161-169.
    • Handle: RePEc:eee:ecmode:v:81:y:2019:i:c:p:161-169
    DOI: 10.1016/j.econmod.2018.12.015
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    More about this item

    Keywords

    Automation; Declining real wages of low-skilled workers; Income inequality; Long-run economic growth; Skill premium;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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