Automation with heterogeneous agents: The effect on consumption inequality

Tommaso Santini

No 28/2022, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: In this paper, I study technological change as a candidate for the observed increase in consumption inequality in the United States. I build an incomplete market model with educational choice combined with a task-based model on the production side. I consider two channels through which technology affects inequality: the skill that an agent can supply in the labor market and the level of capital she owns. In a quantitative analysis, I show that (i) the model replicates the increase in consumption inequality between 1981 and 2008 in the US (ii) educational choice and the return to wealth are quantitatively important in explaining the increase in consumption inequality.

Keywords: automation; factor shares; inequality; productivity; tasks; technological change (search for similar items in EconPapers)
JEL-codes: D63 J23 J24 O14 O31 O33 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-dge and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:282022

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