Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation

Arnaud Costinot and Iván Werning

No 25103, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Technological change, from the advent of robots to expanded trade opportunities, tends to create winners and losers. How should government policy respond? And how should the overall welfare impact of technological change on society be valued? We provide a general theory of optimal technology regulation in a second best world, with rich heterogeneity across households, linear taxes on the subset of firms affected by technological change, and a nonlinear tax on labor income. Our first results consist of three optimal tax formulas, with minimal structural assumptions, involving sufficient statistics that can be implemented using evidence on the distributional impact of new technologies, such as robots and trade. Our second result is a comparative static exercise illustrating that while distributional concerns create a rationale for non-zero taxes on robots and trade, the magnitude of these taxes may decrease as the process of automation and globalization deepens and inequality increases. Our final result shows that, despite limited tax instruments, technological progress is always welcome and valued in the same way as in a first best world.

JEL-codes: F11 F13 H0 H2 H21 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-ene, nep-int and nep-pbe
Note: EFG ITI PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published as Arnaud Costinot & Iván Werning, 2023. "Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation," The Review of Economic Studies, vol 90(5), pages 2261-2291.

Downloads: (external link)
http://www.nber.org/papers/w25103.pdf (application/pdf)

Related works:
Journal Article: Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation (2023)
Working Paper: Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:25103

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25103

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().