Should we fear the robot revolution? (The correct answer is yes)

Advances in artificial intelligence and robotics may be leading to a new industrial revolution. This paper presents a model with the minimum necessary features to analyze the implications for inequality and output. Two assumptions are key: “robot” capital is distinct from traditional capital in its...

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Bibliographic Details
Published in:Journal of monetary economics 2018-08, Vol.97, p.117-148
Main Authors: Berg, Andrew, Buffie, Edward F., Zanna, Luis-Felipe
Format: Article
Language:English
Subjects:
Artificial intelligence
Growth
Income distribution
Inequality
Robots
Technological change
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Summary:Advances in artificial intelligence and robotics may be leading to a new industrial revolution. This paper presents a model with the minimum necessary features to analyze the implications for inequality and output. Two assumptions are key: “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.
ISSN:0304-3932
1873-1295
DOI:10.1016/j.jmoneco.2018.05.014