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Do Robots Increase Wealth Dispersion?

Author

Listed:
  • Francisco Gomes
  • Thomas Jansson
  • Yigitcan Karabulut

Abstract

We document significant negative effects of exposure to increased automation at work on household wealth accumulation. Beyond the income and savings channels, we uncover a novel mechanism contributing to the negative wealth effects of automation that arises through the endogenous optimal portfolio decisions of households. We show that households rebalance their financial wealth away from the stock market in response to increased human capital risk induced by pervasive automation, thereby attaining lower wealth levels and relative positions in the wealth distribution. Our evidence suggests that the portfolio channel amplifies the inequality-enhancing effects of increased automation.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Francisco Gomes & Thomas Jansson & Yigitcan Karabulut, 2024. "Do Robots Increase Wealth Dispersion?," The Review of Financial Studies, Society for Financial Studies, vol. 37(1), pages 119-160.
    • Handle: RePEc:oup:rfinst:v:37:y:2024:i:1:p:119-160.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhad050
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D1 - Microeconomics - - Household Behavior
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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