IDEAS home Printed from https://ideas.repec.org/p/uwa/wpaper/18-07.html
   My bibliography  Save this paper

Automation, Taxes And Transfers With International Rivalry

Author

Listed:
  • Rod Tyers

    (Business School, University of Western Australia and Research School of Economics, Centre for Applied Macroeconomic Analysis (CAMA), Australian National University)

  • Yixiao Zhou

    (School of Economics and Finance, Curtin Business School, Curtin University)

Abstract

Continued automation and declines in low-skill shares of GDP have been widespread globally and linked to inequality. We examine the long-term, global consequences of policies that foster automation or address the distributional consequences of it, using a six-region global macro model. Results depend on whether welfare criteria are Rawlsian, emphasizing the performance of low-skill households, Benthamite, which aggregate pecuniary measures, capital-owner friendly, or simply based on real GDP. Even where automation delivers only bias against the low skilled, we find that the fostering it is a dominant strategy under all but the Rawlsian criterion. We then consider a post automation scenario in which worker displacement is significant, examining inequality-constraining but balance-preserving fiscal interventions, such as tax-financed “earned income tax credits”. These generate only small international spillover effects and are for the most part not preferred under all criteria except the Rawlsian one.

Suggested Citation

  • Rod Tyers & Yixiao Zhou, 2018. "Automation, Taxes And Transfers With International Rivalry," Economics Discussion / Working Papers 18-07, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:18-07
    Note: MD5 = 78d728971aec63a02ba6c8b3e339e871
    as

    Download full text from publisher

    File URL: https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2018/DP%2018.07_Tyers%20and%20Zhou.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rod Tyers & Yixiao Zhou, 2017. "Automation and Inequality with Taxes and Transfers," Economics Discussion / Working Papers 17-01, The University of Western Australia, Department of Economics.
    2. Fleisher, Belton & Li, Haizheng & Zhao, Min Qiang, 2010. "Human capital, economic growth, and regional inequality in China," Journal of Development Economics, Elsevier, vol. 92(2), pages 215-231, July.
    3. Rod Tyers, 2016. "China and Global Macroeconomic Interdependence," The World Economy, Wiley Blackwell, vol. 39(11), pages 1674-1702, November.
    4. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, Oxford University Press, vol. 135(2), pages 645-709.
    5. Justin R. Pierce & Peter K. Schott, 2016. "The Surprisingly Swift Decline of US Manufacturing Employment," American Economic Review, American Economic Association, vol. 106(7), pages 1632-1662, July.
    6. Rod Tyers & Ying Zhang & Tsun Se Cheong, 2013. "China’s Saving and Global Economic Performance," Economics Discussion / Working Papers 13-20, The University of Western Australia, Department of Economics.
    7. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    8. Bretschger, Lucas & Hettich, Frank, 2002. "Globalisation, capital mobility and tax competition: theory and evidence for OECD countries," European Journal of Political Economy, Elsevier, vol. 18(4), pages 695-716, November.
    9. Cette, Gilbert & Fernald, John & Mojon, Benoît, 2016. "The pre-Great Recession slowdown in productivity," European Economic Review, Elsevier, vol. 88(C), pages 3-20.
    10. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    11. Zodrow, George R., 2010. "Capital Mobility and Capital Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(4), pages 865-901, December.
    12. Vipin Arora & Rod Tyers & Ying Zhang, 2014. "Reconstructing the Savings Glut: The Global Implications of Asian Excess Saving," Economics Discussion / Working Papers 14-24, The University of Western Australia, Department of Economics.
    13. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    14. Erik Brynjolfsson & Daniel Rock & Chad Syverson, 2018. "Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics," NBER Chapters, in: The Economics of Artificial Intelligence: An Agenda, pages 23-57, National Bureau of Economic Research, Inc.
    15. Roberto Cardarelli & Lusine Lusinyan, 2015. "U.S. Total Factor Productivity Slowdown; Evidence from the U.S. States," IMF Working Papers 2015/116, International Monetary Fund.
    16. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo.
    17. Joel Mokyr & Chris Vickers & Nicolas L. Ziebarth, 2015. "The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 31-50, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Yixiao & Tyers, Rod, 2019. "Automation and inequality in China," China Economic Review, Elsevier, vol. 58(C).
    2. Rod Tyers & Yixiao Zhou, 2020. "US–China rivalry: The macro policy choices," The World Economy, Wiley Blackwell, vol. 43(9), pages 2286-2314, September.
    3. Rod Tyers & Yixiao Zhou, 2018. "Lost Inflation?," Economics Discussion / Working Papers 18-01, The University of Western Australia, Department of Economics.
    4. 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.
    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. Reijnders, Laurie S.M. & de Vries, Gaaitzen J., 2018. "Technology, offshoring and the rise of non-routine jobs," Journal of Development Economics, Elsevier, vol. 135(C), pages 412-432.
    7. Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2020. "Automation and labor force participation in advanced economies: Macro and micro evidence," European Economic Review, Elsevier, vol. 126(C).
    8. Gregory, Terry & Salomons, Anna & Zierahn, Ulrich, 2016. "Racing With or Against the Machine? Evidence from Europe," VfS Annual Conference 2016 (Augsburg): Demographic Change 145843, Verein für Socialpolitik / German Economic Association.
    9. Dauth, Wolfgang & Findeisen, Sebastian & Südekum, Jens & Wößner, Nicole, 2017. "German robots - the impact of industrial robots on workers," IAB Discussion Paper 201730, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Georg Graetz & Guy Michaels, 2018. "Robots at Work," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 753-768, December.
    11. Cortes, Guido Matias & Salvatori, Andrea, 2019. "Delving into the demand side: Changes in workplace specialization and job polarization," Labour Economics, Elsevier, vol. 57(C), pages 164-176.
    12. Jelena Reljic & Rinaldo Evangelista & Mario Pianta, 2019. "Digital technologies, employment and skills," LEM Papers Series 2019/36, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    13. Goldin, Ian & Koutroumpis, Pantelis & Lafond, François & Winkler, Julian, 2020. "Why is productivity slowing down?," MPRA Paper 99172, University Library of Munich, Germany.
    14. Anderton, Robert & Jarvis, Valerie & Labhard, Vincent & Morgan, Julian & Petroulakis, Filippos & Vivian, Lara, 2020. "Virtually everywhere? Digitalisation and the euro area and EU economies," Occasional Paper Series 244, European Central Bank.
    15. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2020. "Wage response to global production links: evidence for workers from 28 European countries (2005–2014)," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 769-801, November.
    16. David Deming & Lisa B. Kahn, 2018. "Skill Requirements across Firms and Labor Markets: Evidence from Job Postings for Professionals," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 337-369.
    17. Christian Dippel & Robert Gold & Stephan Heblich & Rodrigo Pinto, 2017. "Instrumental Variables and Causal Mechanisms: Unpacking the Effect of Trade on Workers and Voters," CESifo Working Paper Series 6816, CESifo.
    18. Georg Graetz & Guy Michaels, 2017. "Is Modern Technology Responsible for Jobless Recoveries?," American Economic Review, American Economic Association, vol. 107(5), pages 168-173, May.
    19. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1593-1640.
    20. Monika Köppl-turyna & Michael Christl, 2018. "Returns to Skills or Returns to Tasks? A Comment on Hanushek et al. (2015)," Economics Bulletin, AccessEcon, vol. 38(2), pages 783-790.

    More about this item

    Keywords

    Automation; income distribution; taxes; transfers; global modelling;
    All these 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
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    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:uwa:wpaper:18-07. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sam Tang). General contact details of provider: http://edirc.repec.org/data/deuwaau.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.