Automation and inequality with taxes and transfers

Rodney Tyers and Yixiao Zhou

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Technical change in key OECD countries since 1990 is examined in terms of its contributions to total factor productivity and to factor bias. The dependence of real income and inequality on changes in factor abundance, total factor productivity, factor bias, the relative cost of capital goods and the progressivity of the tax system are quantified using an elemental general equilibrium model with three households. For the US, changes in factor bias are shown to have been responsible to the great majority of the observed increase in inequality between 1990 and 2008. The widely anticipated further twist away from low-skill labour is then examined, with downward rigidity of low-skill wages and transfers that sustain low-skill welfare, the increments to which are financed either from capital income or consumption taxes. The potential is identified for unemployment, or “subsidised leisure”, to rise to extraordinarily high levels, with Pareto improving gains requiring that the technology twist accompanies substantial increases in total factor productivity.

Keywords: Automation; income distribution; tax; transfers; general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: C58 D33 D58 O33 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-02
New Economics Papers: this item is included in nep-pbe and nep-pub
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://cama.crawford.anu.edu.au/sites/default/fil ... _2017_tyers_zhou.pdf (application/pdf)

Related works:
Journal Article: Automation and inequality with taxes and transfers (2023)
Working Paper: Automation and inequality with taxes and transfers (2017)
Working Paper: Automation and Inequality with Taxes and Transfers (2017)
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:een:camaaa:2017-16

Access Statistics for this paper

More papers in CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University Contact information at EDIRC.
Bibliographic data for series maintained by Cama Admin ().