Uneven Growth: Automation's Impact on Income and Wealth Inequality
The benefits of new technologies accrue not only to high-skilled labor but also to owners of capital in the form of higher capital incomes. This increases inequality. To make this argument, we develop a tractable theory that links technology to the personal income and wealth distributions – and not just that of wages – and use it to study the distributional effects of automation. We isolate a new theoretical mechanism: automation increases inequality via returns to wealth. The flip side of such return movements is that automation is more likely to lead to stagnant wages and therefore stagnant incomes at the bottom of the distribution. We use a multi-asset model extension to confront differing empirical trends in returns to productive and safe assets and show that the relevant return measures have increased over time. Automation accounts for part of the observed trends in income and wealth inequality and macroeconomic aggregates.
We thank Daron Acemoglu, Fabrizio Perri, Matt Rognlie, Richard Rogerson, Stefanie Stantcheva, Ivan Werning and seminar participants at various institutions for useful comments and Gabriel Zucman for kindly providing some tabulations from the dataset constructed by Piketty, Saez and Zucman (2018). We also thank Benny Kleinman, Nils Lehr and Max Vogler for outstanding research assistance. The views presented here are solely those of the authors and do not represent the views of the Bank of England or its policy committees. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Moll received funding for this project from the Leverhulme Trust and the European Union's Horizon 2020 research and innovation programme under grant number No. GA: 865227.
Benjamin Moll & Lukasz Rachel & Pascual Restrepo, 2022. "Uneven Growth: Automation's Impact on Income and Wealth Inequality," Econometrica, Econometric Society, vol. 90(6), pages 2645-2683, November. citation courtesy of