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How can robots affect wage inequality?
Institution:1. Vienna University of Technology, Institute of Statistics and Mathematical Methods in Economics, Wiedner Hauptstr. 8-10, 1040, Vienna, Austria;2. University of Hohenheim, Institute of Economics, Schloss 1d, Osthof-West, 70593, Stuttgart, Germany;3. Wittgenstein Centre (IIASA, VID, WU), Vienna Institute of Demography, Welthandelsplatz 2 / level 2, 1020, Vienna, Austria;1. Departamento de Gestão e Economia and CEFAGE-UBI. Universidade da Beira Interior, Rua Marques d''Avila e Bolama, 6200-001 Covilhã, Portugal;2. Univ. Beira Interior and CEFAGE-UBI, Portugal;3. University of Porto, Faculty of Economics, and CEFAGE-UBI, Portugal;1. University of Bremen, Faculty of Business Studies and Economics, Hochschulring 4, D-28359, Bremen, Germany;2. Research Fellow at SPEA, Indiana University, Bloomington, 1315 E. Tenth Street, Bloomington, IN, 47405-1701, United States
Abstract:We explain the simultaneous presence of i) increasing per capita output, ii) declining real wages of low-skilled workers, and iii) a rising wage premium of higher education within a model of economic growth in the age of automation. The theoretical implications are consistent with the data for the United States since the 1970s. Thus, automation contributes towards our understanding of the driving forces of rising inequality. The immediate policy conclusion is that investments in higher education can help to soften the negative effects of automation.
Keywords:Automation  Declining real wages of low-skilled workers  Income inequality  Long-run economic growth  Skill premium  O11  O41  D63
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