Hostname: page-component-76fb5796d-5g6vh Total loading time: 0 Render date: 2024-04-27T00:54:58.070Z Has data issue: false hasContentIssue false
  • English
  • Français

AUTOMATION, STAGNATION, AND THE IMPLICATIONS OF A ROBOT TAX

Published online by Cambridge University Press:  16 April 2020

Emanuel Gasteiger  and
Klaus Prettner
Emanuel Gasteiger*
Affiliation:
TU Wien and Instituto Universitário de Lisboa (ISCTE-IUL)
Klaus Prettner
Affiliation:
University of Hohenheim
*
Address correspondence to: Emanuel Gasteiger, TU Wien, Institute of Statistics and Mathematical Methods in Economics, Wiedner Hauptstr. 8-10, 1040 Wien, Austria. e-mail: emanuel.gasteiger@tuwien.ac.at. Phone: (+43) 15880110533.
Get access Rights & Permissions [Opens in a new window]

Abstract

We assess the long-run growth effects of automation in the overlapping generations framework. Although automation implies constant returns to capital and, thus, an AK production side of the economy, positive long-run growth does not emerge. The reason is that automation suppresses wage income, which is the only source of investment in the overlapping generations model. Our result stands in sharp contrast to the representative agent setting with automation, where sustained long-run growth is possible even without technological progress. Our analysis therefore provides a cautionary tale that the underlying modeling structure of saving/investment decisions matters for the derived economic impact of automation. In addition, we show that a robot tax has the potential to raise per capita output and welfare at the steady state. However, it cannot induce a takeoff toward positive long-run growth.

Keywords

AutomationRobot taxesStagnationEconomic growthFiscal policy
Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 1 , January 2022 , pp. 218 - 249
Copyright
© Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We would like to thank the editor William Barnett, an anonymous associate editor, two anonymous referees, and Yueqing Hao for helpful comments and suggestions. Financial support from Fundação para a Ciência e a Tecnologia (UIDB/00315/2020), the Berlin Economics Research Associates program, and the Faculty of Business, Economics, and Social Sciences at the University of Hohenheim within its research focus “Inequality and Economic Policy Analysis (INEPA)” is gratefully acknowledged. All remaining errors are the responsibility of the authors.

References

REFERENCES

Abeliansky, A., Martinez-Zarzoso, I. and Prettner, K. (2019) 3D Printing, international trade, and FDI. Economic Modelling (forthcoming).CrossRefGoogle Scholar
Abeliansky, A. and Prettner, K. (2017) Automation and demographic change. Hohenheim Discussion Papers in Business, Economics, and Social Sciences 05-2017.CrossRefGoogle Scholar
Acemoglu, D. (2009) Introduction to Modern Economic Growth. Princeton, NJ, USA: Princeton University Press.Google Scholar
Acemoglu, D. and Autor, D. (2012) What does human capital do? A review of Goldin and Katz’s the race between education and technology. Journal of Economic Literature 50, 426–463.CrossRefGoogle Scholar
Acemoglu, D. and Restrepo, P. (2018a) Demographics and Automation, NBER Working Papers: No. 24421.10.3386/w24421CrossRefGoogle Scholar
Acemoglu, D. and Restrepo, P. (2018b) Low-skill and high-skill automation. Journal of Human Capital 12, 204–232.CrossRefGoogle Scholar
Acemoglu, D. and Restrepo, P. (2018c) The race between man and machine: Implications of technology for growth, factor shares and employment. American Economic Review 108, 1488–1542.CrossRefGoogle Scholar
Acemoglu, D. and Restrepo, P. (2019) Robots and jobs: Evidence from US labor markets. Journal of Political Economy (forthcoming).10.1086/705716CrossRefGoogle Scholar
Andreoni, J. (1989) Giving with impure altruism: Applications to charity and Ricardian equivalence. Journal of Political Economy 97, 1447–1458.CrossRefGoogle Scholar
Arntz, M., Gregory, T. and Zierahn, U. (2017) Revisiting the risk of automation. Economics Letters 159, 157–160.CrossRefGoogle Scholar
Arntz, M., Gregory, T. and Zierahn, U. (2016) The Risk of Automation for Jobs in OECD Countries. A Comparative Analysis. OECD Social, Employment and Migration Working Papers: No. 189, OECD Publishing, Paris.Google Scholar
Atkinson, A., Piketty, T. and Saez, E. (2011) Top incomes in the long run of history. Journal of Economic Literature 49, 3–71.CrossRefGoogle Scholar
Autor, D. (2010) The Polarization of Job Opportunities in the U.S. Labor Market. Implications for Employment and Earnings. https://economics.mit.edu/files/5554.Google Scholar
Autor, D. H. and Dorn, D. (2013) The growth of low-skill service jobs and the polarization of the US labor market. American Economic Review 103, 1553–1597.CrossRefGoogle Scholar
Autor, D. H., Levy, F. and Murnane, R. J. (2003) The skill content of recent technological change: An empirical exploration. Quarterly Journal of Economics 118, 1279–1333.CrossRefGoogle Scholar
Autor, D. H. and Salomons, A. (2018) Is automation labor-displacing? Productivity growth, employment, and the labor share. Brookings Papers on Economic Activity 49, 1–87.10.1353/eca.2018.0000CrossRefGoogle Scholar
Barrie, J. (2014) Computers Are Writing Novels: Read A Few Samples Here. Available at http://www.businessinsider.com/novels-written-by-computers-2014-11?IR=T (Accessed on January 22, 2017).Google Scholar
Barro, R. J. (1974) Are government bonds net wealth?. Journal of Political Economy 81, 1095–1117.CrossRefGoogle Scholar
Barro, R. J. and Sala-i-Martin, X. (2003) Economic Growth. Cambridge, Massachusetts: The MIT Press.Google Scholar
Benzell, S. G., Kotlikoff, L. J., LaGarda, G. and Sachs, J. D. (2015) Robots Are Us: Some Economics of Human Replacement, NBER Working Papers: No. 20941.Google Scholar
Brynjolfsson, E. and McAfee, A. (2016) The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: Norton & Company.Google Scholar
Cass, D. (1965) Optimum growth in an aggregative model of capital accumulation. The Review of Economic Studies 32, 233–240.CrossRefGoogle Scholar
Chamley, C. (1986) Optimal taxation of capital income in general equilibrium with infinite lives. Econometrica 54, 607–622.CrossRefGoogle Scholar
Chetty, R. (2006) A new method of estimating risk aversion. The American Economic Review 96, 1821–1834.CrossRefGoogle Scholar
Cooley, T. F. and Hansen, G. D. (1992) Tax distortions in a neoclassical monetary economy. Journal of Economic Theory 58, 290–316.10.1016/0022-0531(92)90056-NCrossRefGoogle Scholar
Cords, D. and Prettner, K. (2019) Technological Unemployment Revisited: Automation in a Search and Matching Framework. GLO Discussion Paper Series 308, Global Labor Organization (GLO).Google Scholar
Dauth, W., Findeisen, S., Suedekum, J. and Woessner, N. (2017) German Robots – The Impact of Industrial Robots on Workers, CEPR Discussion Papers: No. 12306.Google Scholar
DeCanio, S. J. (2016) Robots and humans – complements or substitutes?. Journal of Macroeconomics 49, 280–291.CrossRefGoogle Scholar
Delaney, K. J. (2017) Droid Duties: The Robot that Takes Your Job Should Pay Taxes, Says Bill Gates. Available at: https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes/ (Accessed on January 01, 2017).Google Scholar
Diamond, P. A. (1965) National debt in a neoclassical growth model. American Economic Review 55, 1126–1150.Google Scholar
Diamond, P. A. and Mirrlees, J. A. (1971a) Optimal taxation and public production I: Production efficiency. American Economic Review 61, 8–27.Google Scholar
Diamond, P. A. and Mirrlees, J. A. (1971b) Optimal taxation and public production II: Tax rules. American Economic Review 61, 261–278.Google Scholar
Eden, M. and Gaggl, P. (2018) On the welfare implications of automation. Review of Economic Dynamics 29, 15–43.10.1016/j.red.2017.12.003CrossRefGoogle Scholar
Ford, M. (2015) Rise of the Robots: Technology and the Threat of a Jobless Future. NY, USA: Basic Books.Google Scholar
Frey, C. B. and Osborne, M. A. (2013) The Future of Employment: How Susceptible are Jobs to Computerisation? Available at: https://web.archive.org/web/20150109185039/http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf.Google Scholar
Frey, C. B. and Osborne, M. A. (2017) The future of employment: How susceptible are jobs to computerisation?. Technological Forecasting and Social Change 114, 254–280.CrossRefGoogle Scholar
Graetz, G. and Michaels, G. (2018) Robots at work. The Review of Economics and Statistics 100, 753–768.10.1162/rest_a_00754CrossRefGoogle Scholar
Growiec, J. (2019) The Hardware-Software Model: A New Conceptual Framework of Production, R&D, and Growth with AI, Working Papers: No. 2019-042, Warsaw School of Economics.Google Scholar
Guerreiro, J., Rebelo, S. and Teles, P. (2018) Should Robots be Taxed? NBER Working Papers: No. 23806.Google Scholar
Guimarães, L. and Mazeda Gil, P. (2019) Explaining the labor share: Automation vs labor market Institutions. MPRA Papers: No. 92062.Google Scholar
Guvenen, F. (2006) Reconciling conflicting evidence on the elasticity of intertemporal substitution: A macroeconomic perspective. Journal of Monetary Economics 53, 1451–1472.10.1016/j.jmoneco.2005.06.001CrossRefGoogle Scholar
Hémous, D. and Olsen, M. (2016) The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality. Mimeo.Google Scholar
International Federation of Robotics (2015) World Robotics. Industrial Robots 2015. International Federation of Robotics.Google Scholar
Jones, C. I. (1995) R&D-based models of economic growth. Journal of Political Economy 103, 759–784.CrossRefGoogle Scholar
Judd, K. L. (1985) Redistributive taxation in a simple perfect foresight model. Journal of Public Economics 28, 59–83.CrossRefGoogle Scholar
Koopmans, T. C. (1965) On the concept of optimal economic growth. In: The Econometric Approach to Development Planning. Amsterdam: North Holland.Google Scholar
Lankisch, C. (2017) Effekte der Automatisierung auf Wirtschaftswachstum und Lohnentwicklung. Master thesis available at http://repositum.tuwien.ac.at/obvutwhs/content/titleinfo/1943404.Google Scholar
Lankisch, C., Prettner, K. and Prskawetz, A. (2019) How can robots affect wage inequality?. Economic Modelling 81, 161–169.CrossRefGoogle Scholar
Lucas, R. E. (1990) Supply-side economics: An analytical review. Oxford Economic Papers 42, 293–316.CrossRefGoogle Scholar
Merriam-Webster (2017) Automation. https://www.merriam-webster.com/dictionary/automation (Accessed on March 3, 2017).Google Scholar
National Science Foundation (2009) Maybe Robots Dream of Electric Sheep, But can They do Science? Press Release. https://www.nsf.gov/news/news_summ.jsp?cntn_id=114495 (Accessed on January 01, 2018).Google Scholar
Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA and London: The Belknap Press of Harvard University Press.CrossRefGoogle ScholarPubMed
Prettner, K. (2019) A note on the implications of automation for economic growth and the labor share. Macroeconomic Dynamics 23, 1294–1301.CrossRefGoogle Scholar
Prettner, K. and Strulik, H. (2019) Innovation, automation, and inequality: Policy challenges in the race against the machine. Journal of Monetary Economics (forthcoming).CrossRefGoogle Scholar
Prodhan, G. (2017) European Parliament Calls for Robot Law, Rejects Robot Tax. http://www.reuters.com/article/us-europe-robots-lawmaking-idUSKBN15V2KM (Accessed on June 01, 2017).Google Scholar
Rebelo, S. (1991) Long-run policy analysis and long-run growth. Journal of Political Economy 99, 500–521.CrossRefGoogle Scholar
Romer, P. (1986) Increasing returns and long-run growth. Journal of Political Economy 94, 1002–1037.CrossRefGoogle Scholar
Sachs, J. D., Benzell, S. G. and LaGarda, G. (2015) Robots: Curse or Blessing? A Basic Framework, NBER Working Papers: No. 21091.Google Scholar
Sachs, J. D. and Kotlikoff, L. J. (2012) Smart Machines and Long-Term Misery. NBER Working Papers: No. 18629.CrossRefGoogle Scholar
Schmidt, M. and Lipson, H. (2009) Distilling free-form natural laws from experimental data. Science 324, 81–85.CrossRefGoogle ScholarPubMed
Solow, R. M. (1956) A contribution to the theory of economic growth. The Quarterly Journal of Economics 70, 65–94.CrossRefGoogle Scholar
Steigum, E. (2011) Robotics and Growth. In de La Grandville, Olivier (ed), Frontiers of Economics and Globalization: Economic Growth and Development, Chapter 21, pp. 543–557. Bingley: Emerald Group.CrossRefGoogle Scholar
Tegmark, M. (2017) Life 3.0: Being Human in the Age of Artificial Intelligence. London, UK: Allen Lane – Penguin Random House.Google Scholar
The Economist (2014) Immigrants from the future. A special report on robots. The Economist, March 27th 2014.Google Scholar
World Bank (2019) World Development Indicators 1960–2019. Washington, DC: The World Bank.Google Scholar