Uneven Growth: Automation's Impact on Income and Wealth Inequality

Benjamin Moll, Lukasz Rachel, Pascual Restrepo

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

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 distribution of income and wealth—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 by raising returns to wealth. The flip side of such return movements is that automation can lead to stagnant wages and, therefore, stagnant incomes at the bottom of the distribution. We use a multiasset 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 can account for part of the observed trends in income and wealth inequality.

Original languageEnglish (US)
Pages (from-to)2645-2683
Number of pages39
JournalEconometrica
Volume90
Issue number6
DOIs
StatePublished - Nov 2022
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Inequality
  • automation
  • capital
  • labor share
  • returns
  • technology
  • wages
  • wealth

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