Uneven growth: automation's impact on income and wealth inequality

Moll, Benjamin ORCID: 0009-0003-6067-359X, Rachel, Lukasz and Restrepo, Pascual (2022) Uneven growth: automation's impact on income and wealth inequality. Econometrica, 90 (6). pp. 2645-2683. ISSN 0012-9682

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Abstract

The benefits of new technologies accrue not only to high-skilled labor but also to owners of capital in the form of higher capital incomes. This increases inequality. To make this argument, we develop a tractable theory that links technology to the distribution of income and wealth—and not just that of wages—and use it to study the distributional effects of automation. We isolate a new theoretical mechanism: automation increases inequality by raising returns to wealth. The flip side of such return movements is that automation can lead to stagnant wages and, therefore, stagnant incomes at the bottom of the distribution. We use a multiasset model extension to confront differing empirical trends in returns to productive and safe assets and show that the relevant return measures have increased over time. Automation can account for part of the observed trends in income and wealth inequality.

Item Type:	Article
Additional Information:	© 2022 The Econometric Society.
Divisions:	Economics
Date Deposited:	30 Nov 2022 16:18
Last Modified:	17 Nov 2024 00:12
URI:	http://eprints.lse.ac.uk/id/eprint/117447

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