Should We Fear the Robot Revolution? (The Correct Answer is Yes)

Andrew Berg (), Edward Buffie and Luis-Felipe Zanna

No 2018/116, IMF Working Papers from International Monetary Fund

Abstract: We may be on the cusp of a “second industrial revolution” based on advances in artificial intelligence and robotics. We analyze the implications for inequality and output, using a model with two assumptions: “robot” capital is distinct from traditional capital in its degree 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 may transform the labor market. Our main results are surprisingly robust: automation is good for growth and bad for equality; in the benchmark model real wages fall in the short run and eventually rise, but “eventually” can easily take generations.

Keywords: WP; real wage; Technological change; robots; growth; income distribution.; wage inequality; market-clearing wage; wage income; low-skill wage; per capita income; labor service; wage growth; Robotics; Real wages; Wage adjustments; Wages (search for similar items in EconPapers)
Pages: 61
Date: 2018-05-21
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Citations: View citations in EconPapers (119)

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