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Aging and automation in economies with search frictions

Xiaomeng Zhang (), Theodore Palivos and Xiangbo Liu ()
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Xiaomeng Zhang: Capital University of Economics and Business
Xiangbo Liu: Renmin University of China

Journal of Population Economics, 2022, vol. 35, issue 2, No 8, 642 pages

Abstract: Abstract This paper investigates the impact of an increase in life expectancy on the level and the distribution of income in the presence of skill heterogeneity and automation. It shows analytically that an increase in life expectancy induces the replacement of low-skilled workers by automation capital and high-skilled workers. Moreover, it raises the skill premium and has an ambiguous effect on total income. A simulation exercise, based on US data, shows that an increase in life expectancy raises the level as well as the inequality of income. We consider redistributive policies that can mitigate some of the adverse effects of an increase in life expectancy for low-skilled workers.

Keywords: Life expectancy; Automation; Search and matching; Skill heterogeneity (search for similar items in EconPapers)
JEL-codes: J11 J24 J64 O33 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00148-021-00860-3

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