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How can robots affect wage inequality?

Clemens Lankisch, Klaus Prettner () and Alexia Fürnkranz-Prskawetz

Economic Modelling, 2019, vol. 81, issue C, 161-169

Abstract: We explain the simultaneous presence of i) increasing per capita output, ii) declining real wages of low-skilled workers, and iii) a rising wage premium of higher education within a model of economic growth in the age of automation. The theoretical implications are consistent with the data for the United States since the 1970s. Thus, automation contributes towards our understanding of the driving forces of rising inequality. The immediate policy conclusion is that investments in higher education can help to soften the negative effects of automation.

Keywords: Automation; Declining real wages of low-skilled workers; Income inequality; Long-run economic growth; Skill premium (search for similar items in EconPapers)
JEL-codes: O11 O41 D63 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econmod.2018.12.015

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