IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2017-70.html

Automation and Inequality with Taxes and Transfers

Author

Listed:
  • Rod Tyers
  • Yixiao Zhou

Abstract

The dependence of real income and inequality on changes in factor abundance, total factor productivity, factor bias, the relative cost of capital goods and the progressivity of the tax system are quantified using an elemental general equilibrium model with three households. Observed declines in low-skill labour shares are shown to have been generic in the OECD and to have been responsible for most of the increase in US inequality between 1990 and 2016. The widely anticipated future twist away from low-skill labour toward capital is then examined, in combination with expected changes in population and its skill composition. With downward rigidity of low-skill wages the potential is identified for unemployment to rise to extraordinarily high levels. Productivity growth at twice the pace since 1990 is shown to limit this, though it does not slow the concentration of income. The superior policy response is shown to be a generalization of the US "earned income tax credit" system, with financing from taxes on consumption, rather than capital income.

Suggested Citation

  • Rod Tyers & Yixiao Zhou, 2017. "Automation and Inequality with Taxes and Transfers," CAMA Working Papers 2017-70, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2017-70
    as

    Download full text from publisher

    File URL: https://crawford.anu.edu.au/sites/default/files/2025-01/70_2017_tyers_zhou_0.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhou, Yixiao & Tyers, Rod, 2019. "Automation and inequality in China," China Economic Review, Elsevier, vol. 58(C).
    2. Nakatani, Ryota, 2024. "Optimal Taxation in the Automated Era," MPRA Paper 121347, University Library of Munich, Germany.
    3. Rod Tyers & Yixiao Zhou, 2018. "Automation, Taxes and Transfers with International Rivalry," CAMA Working Papers 2018-44, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Rod Tyers & Yixiao Zhou, 2018. "Lost Inflation?," Economics Discussion / Working Papers 18-01, The University of Western Australia, Department of Economics.
    5. Yixiao ZHOU & Rod TYERS, 2019. "Implications of Automation for Global Migration," Economics Discussion / Working Papers 19-19, The University of Western Australia, Department of Economics.
    6. Yingying Lu & Yixiao Zhou, 2021. "A review on the economics of artificial intelligence," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1045-1072, September.
    7. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.
    8. Geoff Weir, 2018. "Wage Growth Puzzles and Technology," RBA Research Discussion Papers rdp2018-10, Reserve Bank of Australia.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2017-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cama Admin (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.