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Effects of a capital-use tax and automation subsidy in a model of innovation and automation

Author

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  • Maeda, Daiki
  • Morimoto, Takaaki
  • Motoyama, Takumi
  • Saito, Yuki

Abstract

To examine the effects of a capital-use tax and automation subsidy on the proportion of automated industries and the inequality between workers and capitalists, we formulate a Schumpeterian growth model with automation, innovation, and human capital accumulation. We analytically show that a higher capital-use tax drives down the wage rate and stimulates automation on the balanced growth path, whereas a reduction in automation subsidies lowers the wage rate but inhibits automation. Moreover, we conduct a quantitative analysis demonstrating that policies that inhibit automation do indeed reduce wages; nevertheless, however, they can address the disparity between workers and capitalists.

Suggested Citation

  • Maeda, Daiki & Morimoto, Takaaki & Motoyama, Takumi & Saito, Yuki, 2025. "Effects of a capital-use tax and automation subsidy in a model of innovation and automation," Journal of Economic Behavior & Organization, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:jeborg:v:238:y:2025:i:c:s0167268125003737
    DOI: 10.1016/j.jebo.2025.107254
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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