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Automation and inequality in China

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  • Zhou, Yixiao
  • Tyers, Rod

Abstract

In transitional economies, low wages imply sub-OECD yet growing labor shares of value added. China's rapid development has, however, seen a declining low-skill labor share and rising inequality. Here, a stylized model with three households and separable TFP and factor bias suggests a third of the decline in the low-skill share since 1994 is due to structural change and the rest mainly to skill-biased technical change. Expected future twists away from low-skill labor toward capital yield further inequality, moderated if strong TFP growth and population stability continue. But if the bias accompanies TFP shortfalls, worker displacement and rising inequality are in prospect.

Suggested Citation

  • Zhou, Yixiao & Tyers, Rod, 2019. "Automation and inequality in China," China Economic Review, Elsevier, vol. 58(C).
  • Handle: RePEc:eee:chieco:v:58:y:2019:i:c:s1043951x18300981
    DOI: 10.1016/j.chieco.2018.07.008
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    Cited by:

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    3. Li, Xun & Hui, Eddie Chi-man & Lang, Wei & Zheng, Shali & Qin, Xiaozhen, 2020. "Transition from factor-driven to innovation-driven urbanization in China: A study of manufacturing industry automation in Dongguan City," China Economic Review, Elsevier, vol. 59(C).
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    6. Wright, Scott A. & Schultz, Ainslie E., 2018. "The rising tide of artificial intelligence and business automation: Developing an ethical framework," Business Horizons, Elsevier, vol. 61(6), pages 823-832.

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    More about this item

    Keywords

    Automation; Income distribution; Tax; Transfers; General equilibrium; China;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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