Uneven Growth: Automation's Impact on Income and Wealth Inequality

Benjamin Moll, Lukasz Rachel and Pascual Restrepo

No 28440, NBER Working Papers from National Bureau of Economic Research, Inc

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 personal income and wealth distributions – 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 via returns to wealth. The flip side of such return movements is that automation is more likely to lead to stagnant wages and therefore stagnant incomes at the bottom of the distribution. We use a multi-asset 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 accounts for part of the observed trends in income and wealth inequality and macroeconomic aggregates.

JEL-codes: E21 E22 E24 E25 J31 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-lma and nep-mac
Note: EFG
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Citations: View citations in EconPapers (33)

Published as Benjamin Moll & Lukasz Rachel & Pascual Restrepo, 2022. "Uneven Growth: Automation's Impact on Income and Wealth Inequality," Econometrica, Econometric Society, vol. 90(6), pages 2645-2683, November.

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Working Paper: Uneven growth: automation’s impact on income and wealth inequality (2021)
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