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The Role of Education in Mitigating Automation’s Effect on Wage Inequality

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  • Raja Bentaouet Kattan
  • Kevin Macdonald
  • Harry Anthony Patrinos

Abstract

While automation has renewed the debate about labor market policy responses to inequality and job losses, less attention has been given to education policy. We present a general equilibrium model and empirical evidence showing how education mitigates wage inequality resulting from a recent, worst‐case expectation of technology’s ability to automate job tasks. Our model predicts that education could reduce automation’s marginal effect on the wage gap between lower‐ and higher‐skilled labor by up to 3 percentage points. Education policies that promote automation‐complementing skill formation would reduce the need for costly labor market and wealth redistribution interventions later in life.

Suggested Citation

  • Raja Bentaouet Kattan & Kevin Macdonald & Harry Anthony Patrinos, 2021. "The Role of Education in Mitigating Automation’s Effect on Wage Inequality," LABOUR, CEIS, vol. 35(1), pages 79-104, March.
    • Handle: RePEc:bla:labour:v:35:y:2021:i:1:p:79-104
    DOI: 10.1111/labr.12187
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    1. Macdonald,Kevin Alan David & Patrinos,Harry Anthony, 2021. "Education Quality, Green Technology, and the Economic Impact of Carbon Pricing," Policy Research Working Paper Series 9808, The World Bank.
    2. Bürgisser, Reto, 2023. "Policy Responses to Technological Change in the Workplace," SocArXiv kwxn2, Center for Open Science.

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