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A note on automation, stagnation, and the implications of a robot tax

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  • Gasteiger, Emanuel
  • Prettner, Klaus

Abstract

We analyze the long-run growth effects of automation in the canonical overlapping generations framework. While automation implies constant returns to capital within this model class (even in the absence of technological progress), we show that it does not have the potential to lead to positive long-growth. The reason is that automation suppresses wages, which are the only source of investment because of the demographic structure of the overlapping generations model. This result stands in sharp contrast to the effects of automation in the representative agent setting, where positive long-run growth is feasible because agents can invest out of their wage income and out of their asset income. We also analyze the effects of a robot tax that has featured prominently in the policy debate on automation and show that it could raise the capital stock and per capita output at the steady state. However, the robot tax cannot induce a takeoff toward positive long-run growth.

Suggested Citation

  • Gasteiger, Emanuel & Prettner, Klaus, 2017. "A note on automation, stagnation, and the implications of a robot tax," Discussion Papers 2017/17, Free University Berlin, School of Business & Economics.
  • Handle: RePEc:zbw:fubsbe:201717
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A note on automation, stagnation, and the implications of a robot tax
      by Christian Zimmermann in NEP-DGE blog on 2017-07-19 02:09:49

    Citations

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    Cited by:

    1. Cords, Dario & Prettner, Klaus, 2018. "Technological unemployment revisited: Automation in a search and matching framework," Hohenheim Discussion Papers in Business, Economics and Social Sciences 19-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    2. Ben Vermeulen & Jan Kesselhut & Andreas Pyka & Pier Paolo Saviotti, 2018. "The Impact of Automation on Employment: Just the Usual Structural Change?," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-27, May.
    3. Geiger, Niels & Prettner, Klaus & Schwarzer, Johannes A., 2018. "Automatisierung, Wachstum und Ungleichheit," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    4. Prettner, Klaus & Strulik, Holger, 2017. "The lost race against the machine: Automation, education and inequality in an R&D-based growth model," Hohenheim Discussion Papers in Business, Economics and Social Sciences 08-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    5. Huang, Xu & Hu, Yan & Dong, Zhiqiang, 2019. "The macroeconomic consequences of artificial intelligence: A theoretical framework," Economics Discussion Papers 2019-48, Kiel Institute for the World Economy (IfW).
    6. Zhang, Pengqing, 2019. "Automation, wage inequality and implications of a robot tax," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 500-509.
    7. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2017. "Robots and the skill premium: An automation-based explanation of wage inequality," Hohenheim Discussion Papers in Business, Economics and Social Sciences 29-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    8. Prettner, Klaus & Strulik, Holger, 2020. "Innovation, automation, and inequality: Policy challenges in the race against the machine," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 249-265.
    9. Martin Labaj & Daniel Dujava, 2019. "Economic growth and convergence during the transition to production using automation capital," Department of Economic Policy Working Paper Series 017, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    10. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2019. "How can robots affect wage inequality?," Economic Modelling, Elsevier, vol. 81(C), pages 161-169.
    11. Kerstin Hotte & Angelos Theodorakopoulos & Pantelis Koutroumpis, 2021. "Does automation erode governments' tax basis? An empirical assessment of tax revenues in Europe," Papers 2103.04111, arXiv.org.
    12. Uwe Thuemmel, 2018. "Optimal Taxation of Robots," CESifo Working Paper Series 7317, CESifo.

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    More about this item

    Keywords

    automation; robots; robot taxes; investment; stagnation; economic growth; canonical overlapping generations model; fiscal policy;
    All these keywords.

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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