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Automation and Income Inequality in Europe

Author

Listed:
  • Doorley, Karina

    (Economic and Social Research Institute, Dublin)

  • Gromadzki, Jan

    (Vienna University of Economics and Business)

  • Lewandowski, Piotr

    (Institute for Structural Research (IBS))

  • Tuda, Dora

    (Trinity College Dublin)

  • Van Kerm, Philippe

    (LISER (CEPS/INSTEAD))

Abstract

We study the effects of robot penetration on household income inequality in 14 European countries between 2006–2018, a period marked by the rapid adoption of industrial robots. Automation reduced relative hourly wages and employment of more exposed demographic groups, similarly to the results for the United States. Using robot-driven wage and employment shocks as input to the EUROMOD microsimulation model, we find that automation had minor effects on income inequality. Household labour income diversification and tax and welfare policies largely absorbed labour market shocks caused by automation. Transfers played a key role in cushioning the transmission of these shocks to household incomes.

Suggested Citation

  • Doorley, Karina & Gromadzki, Jan & Lewandowski, Piotr & Tuda, Dora & Van Kerm, Philippe, 2023. "Automation and Income Inequality in Europe," IZA Discussion Papers 16499, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16499
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    More about this item

    Keywords

    robots; automation; tasks; income inequality; wage inequality; microsimulation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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