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Robots and the skill premium: An automation-based explanation of wage inequality

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

No 29-2017, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

Abstract: We analyze the effects of automation on the wages of high-skilled and low- skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita GDP, ii) de-clining real wages of low-skilled workers, and iii) an increasing skill-premium. These developments are consistent with the experience in the United States over the past decades and have the potential to contribute to the explanation of the rise in overall incomeinequality that we have observed since the 1980s.

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: I24 O11 O41 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cta, nep-ore and nep-pay
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