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Robots and the skill premium: An automation-based explanation of wage inequality

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  • Lankisch, Clemens
  • Prettner, Klaus
  • Prskawetz, Alexia

Abstract

We analyze the effects of automation on the wages of high-skilled and low- skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita GDP, ii) de-clining real wages of low-skilled workers, and iii) an increasing skill-premium. These developments are consistent with the experience in the United States over the past decades and have the potential to contribute to the explanation of the rise in overall incomeinequality that we have observed since the 1980s.

Suggested Citation

  • Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2017. "Robots and the skill premium: An automation-based explanation of wage inequality," Hohenheim Discussion Papers in Business, Economics and Social Sciences 29-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    • Handle: RePEc:zbw:hohdps:292017
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    Cited by:

    1. Dario Cords & Klaus Prettner, 2022. "Technological unemployment revisited: automation in a search and matching framework [The future of work: meeting the global challenges of demographic change and automation]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 115-135.
    2. Andre Jungmittag & Annarosa Pesole, 2019. "The impact of robots on labour productivity: A panel data approach covering 9 industries and 12 countries," JRC Working Papers on Labour, Education and Technology 2019-08, Joint Research Centre.
    3. Geiger, Niels & Prettner, Klaus & Schwarzer, Johannes A., 2018. "Automatisierung, Wachstum und Ungleichheit," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    4. Hayakawa, Kazunobu & Mukunoki, Hiroshi, 2022. "How does additive manufacturing change trade?: evidence from trade in sound recordings," IDE Discussion Papers 848, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Wright, Scott A. & Schultz, Ainslie E., 2018. "The rising tide of artificial intelligence and business automation: Developing an ethical framework," Business Horizons, Elsevier, vol. 61(6), pages 823-832.
    6. Ilona Pavlenkova & Luca Alfieri & Jaan Masso, 2024. "Effects of automation on the gender pay gap: the case of Estonia," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 584-608.
    7. Zhang, Pengqing, 2019. "Automation, wage inequality and implications of a robot tax," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 500-509.

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    More about this item

    Keywords

    automation; declining real wages of low-skilled workers; income inequality; long-run economic growth; skill premium;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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