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Automation, wage inequality and implications of a robot tax

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  • Zhang, Pengqing

Abstract

To examine how automation affects the skilled-unskilled wage gap and whether robots should be taxed, this paper embeds the use of robots within the specific-factor framework. In the basic model, we show that an acceleration in automation generates the displacement effect and the capital reallocation effect. If the elasticity of substitution between labor and capital in the robot-producing sector is not too small (resp. is sufficiently small), then the capital reallocation effect cannot (resp. can) counteract the displacement effect and thus the wage gap will be expanded (resp. will be narrowed down). In the extended models, the results of the basic model will still hold when a labor union is introduced into the robot-using sector, but the wage gap will be unconditionally expanded when a regulated wage rate is introduced into that sector. In both the basic model and the extended models, a tax on robots will unambiguously narrow down the wage gap.

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  • Zhang, Pengqing, 2019. "Automation, wage inequality and implications of a robot tax," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 500-509.
    • Handle: RePEc:eee:reveco:v:59:y:2019:i:c:p:500-509
    DOI: 10.1016/j.iref.2018.10.013
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    Cited by:

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    3. Mohammed M. Mabkhot & Pedro Ferreira & Antonio Maffei & Primož Podržaj & Maksymilian Mądziel & Dario Antonelli & Michele Lanzetta & Jose Barata & Eleonora Boffa & Miha Finžgar & Łukasz Paśko & Paolo M, 2021. "Mapping Industry 4.0 Enabling Technologies into United Nations Sustainability Development Goals," Sustainability, MDPI, vol. 13(5), pages 1-33, February.
    4. Maciej Cieślukowski & Przemysław Garsztka & Beata Zyznarska-Dworczak, 2022. "The Impact of Robotification on the Financial Situation of Microenterprises: Evidence from the Financial Services Sector in Poland," Risks, MDPI, vol. 10(2), pages 1-20, February.
    5. Raja Bentaouet Kattan & Kevin Macdonald & Harry Anthony Patrinos, 2021. "The Role of Education in Mitigating Automation’s Effect on Wage Inequality," LABOUR, CEIS, vol. 35(1), pages 79-104, March.
    6. Venturini, Francesco, 2022. "Intelligent technologies and productivity spillovers: Evidence from the Fourth Industrial Revolution," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 220-243.
    7. KATO Hayato & Jonas LOEBBING, 2023. "Tax Competition for Automation Capital," Discussion papers 23078, Research Institute of Economy, Trade and Industry (RIETI).
    8. Casas, Pablo & Torres, José L., 2022. "Government size and automation," MPRA Paper 115271, University Library of Munich, Germany.
    9. Živilė Stankevičiūtė & Eglė Staniškienė & Joana Ramanauskaitė, 2021. "The Impact of Job Insecurity on Employee Happiness at Work: A Case of Robotised Production Line Operators in Furniture Industry in Lithuania," Sustainability, MDPI, vol. 13(3), pages 1-20, February.
    10. Živilė Stankevičiūtė & Eglė Staniškienė & Joana Ramanauskaitė, 2021. "The Impact of Job Insecurity on Organisational Citizenship Behaviour and Task Performance: Evidence from Robotised Furniture Sector Companies," IJERPH, MDPI, vol. 18(2), pages 1-17, January.
    11. Luminita IONESCU & Maria ANDRONIE, 2019. "The Future of Jobs in the Digital World," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 5(1), pages 89-94, November.
    12. Oscar Afonso & Rosa Forte, 2023. "How powerful are fiscal and monetary policies in a directed technical change model with humans and robots?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3008-3032, July.
    13. Nakatani, Ryota, 2022. "Optimal fiscal policy in the automated economy," MPRA Paper 115003, University Library of Munich, Germany.

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    More about this item

    Keywords

    Automation; Wage inequality; Robot taxation; General equilibrium approach;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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