Will Automation and Robotics lead to more inequality?

Elise S Brezis () and Amir Rubin
Additional contact information
Elise S Brezis: Bar-Ilan University

No 2023-06, Working Papers from Bar-Ilan University, Department of Economics

Abstract: This paper presents a new framework for analyzing automation, robotics, and high-tech, which differs from the canonical model of technological progress byincorporating the higher education system. The main difference is that there is not just one type of skilled workers, but two types, and there is not one type of education but two - elite universities and standard ones. The gap between these two types of education is called 'elitism gap'.The 'elitism gap' in the higher-education sector enables a separation of individuals by their abilities. Since the economy is divided between low-tech and high-tech sectors, the elitism gap leads to a separating equilibrium in which, high-ability workers graduating from top universities work in the high-tech sector, while low- ability workers, graduate from standard universities and work in the low-tech industries. In consequence, human capital in both industries is different, which leadsto wage inequality. We then analyze the effects of an increased use of robotics on inequality. We show that robots affect the “matching effect” between abilities and education, and in consequence, inequality increases. We also show that wages and productivity gaps between high-tech and low-tech sectors are fueled by the elitism gap in higher education. This leads to heterogeneity in human capital, and therefore to an increase in wage inequality. We develop an index of the elitism gap, and show a positive correlation between the index of elitism gap and inequality in OECD countries.

Keywords: ability; skills; productivity; duality; higher education; robots; wage premium; international leadership (search for similar items in EconPapers)
JEL-codes: I26 J24 O14 O4 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2023-11
References: Add references at CitEc
Citations:

Downloads: (external link)
https://econ.biu.ac.il/sites/econ/files/working-papers/2023-06.pdf Working paper (application/pdf)

Related works:
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:biu:wpaper:2023-06

Access Statistics for this paper

More papers in Working Papers from Bar-Ilan University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Department of Economics ().