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Automation and income inequality in Europe

Author

Listed:
  • Doorley, Karina
  • Gromadzki, Jan
  • Lewandowski, Piotr
  • Tuda, Dora
  • Van Kerm, Philippe

Abstract

We study the effects of robot penetration on household income inequality in 14 European countries between 2006-2018, a period of rapid adoption of industrial robots. Automation reduced relative hourly wages and employment of more exposed demographic groups, similarly to the results for the US. Using robot-driven wage and employment shocks as input to the EUROMOD microsimulation model, we find that automation had minor effects on income inequality. Household labour income diversification and tax and welfare policies largely absorbed labour market shocks caused by automation. Transfers played a key role in cushioning the transmission of these shocks to household incomes.

Suggested Citation

  • Doorley, Karina & Gromadzki, Jan & Lewandowski, Piotr & Tuda, Dora & Van Kerm, Philippe, 2024. "Automation and income inequality in Europe," Ruhr Economic Papers 1070, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:287766
    DOI: 10.4419/96973242
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    Keywords

    Robots; automation; tasks; income inequality; wage inequality; microsimulation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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