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

IMF Working Papers, May 21, 2018

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

Authors: Andrew Berg, Edward F Buffie, Luis-Felipe Zanna
Date: May 21, 2018
Series: Working Paper No. 2018/116
Pages: 61
DOI: https://doi.org/10.5089/9781484300831.001
Core summary: Advances in artificial intelligence and robotics may constitute a “second industrial revolution.” The paper analyzes implications for inequality and output using a model with two key assumptions: (1) “robot” capital is distinct from traditional capital in its degree of substitutability with human labor; and (2) only capitalists and skilled workers save. A range of model variants reflecting different views of automation’s labor-market effects is analyzed.

Distinct capital types:
- “Robot” capital is modeled as distinct from traditional capital by its degree of substitutability with human labor.
Saving behavior:
- Only capitalists and skilled workers save.
Variants:
- The analysis includes a range of model variants to reflect widely different views of how automation may transform the labor market.

Core result:
- Automation is good for growth and bad for equality.
Real wage dynamics:
- In the benchmark model real wages fall in the short run and eventually rise, but “eventually” can easily take generations.
Robustness:
- The main results are described as surprisingly robust across the range of model variants examined.

Subject: Labor, Real wages, Robotics, Technology, Wage adjustments, Wages
Keywords: growth, income distribution., labor service, low-skill wage, market-clearing wage, per capita income, real wage, Real wages, Robotics, robots, Technological change, Wage adjustments, wage growth, wage income, wage inequality, Wages, WP