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Rodney Tyers and Yixiao Zhou
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Yixiao Zhou: School of Economics and Finance, Curtin Business School, Curtin University

No 18-07, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Continued automation and declines in low-skill shares of GDP have been widespread globally and linked to inequality. We examine the long-term, global consequences of policies that foster automation or address the distributional consequences of it, using a six-region global macro model. Results depend on whether welfare criteria are Rawlsian, emphasizing the performance of low-skill households, Benthamite, which aggregate pecuniary measures, capital-owner friendly, or simply based on real GDP. Even where automation delivers only bias against the low skilled, we find that the fostering it is a dominant strategy under all but the Rawlsian criterion. We then consider a post automation scenario in which worker displacement is significant, examining inequality-constraining but balance-preserving fiscal interventions, such as tax-financed “earned income tax credits”. These generate only small international spillover effects and are for the most part not preferred under all criteria except the Rawlsian one.

Keywords: Automation; income distribution; taxes; transfers; global modelling (search for similar items in EconPapers)
JEL-codes: C68 D33 F21 F42 O33 (search for similar items in EconPapers)
Date: 2018
Note: MD5 = 78d728971aec63a02ba6c8b3e339e871
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Working Paper: Automation, taxes and transfers with International rivalry (2018) Downloads
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