Should We Fear the Robot Revolution? (The Correct Answer is Yes)
62 Pages Posted: 1 Aug 2018
Date Written: May 2018
We may be on the cusp of a 'second industrial revolution' based on advances in artificialintelligence and robotics. We analyze the implications for inequality and output, usinga model with two assumptions: 'robot' capital is distinct from traditional capital in itsdegree of substitutability with human labor; and only capitalists and skilled workers save.We analyze a range of variants that reflect widely different views of how automation maytransform the labor market. Our main results are surprisingly robust: automation is goodfor growth and bad for equality; in the benchmark model real wages fall in the short runand eventually rise, but 'eventually' can easily take generations.
Keywords: Production, Technological change, Income distribution, General equilibrium models, robots, growth, Aggregate Factor Income Distribution, General
JEL Classification: E23, E25, O30, O40
Suggested Citation: Suggested Citation