Do robots increase wealth dispersion?
This research paper discusses the impact of automation on household wealth - is it “neutral” or could it amplify inequality?
The challenge:
The worldwide stock of industrial robots has almost tripled in the past decade and is projected to grow at a similar rate or faster over the next 10 years. The extent and rapidity of the progress in automation, including major leaps in artificial-intelligence capabilities, raises several questions with important implications for individuals. Automation is mechanistic by definition – but is it “neutral” in terms of its impact on households with different levels of wealth, or could it amplify inequality?
This research paper discusses the impact of automation on household wealth - is it “neutral” or could it amplify inequality?
The challenge:
The worldwide stock of industrial robots has almost tripled in the past decade and is projected to grow at a similar rate or faster over the next 10 years. The extent and rapidity of the progress in automation, including major leaps in artificial-intelligence capabilities, raises several questions with important implications for individuals. Automation is mechanistic by definition – but is it “neutral” in terms of its impact on households with different levels of wealth, or could it amplify inequality?
The intervention:
We analysed the effect of increased automation on household wealth accumulation and on the underlying mechanisms contributing to its impact. We found that adoption of robots across employees in the same industry significantly increases the unemployment risk of exposed households, and that households facing increased labour-income risk substantially reduce or eliminate their exposure to the stock market. In doing so, they forgo substantial equity returns of up to 4.3% a year. They therefore experience a considerable drop in the growth of their financial wealth, accumulating significantly less wealth relative to their incomes.
The impact:
Our findings strongly suggest that the patterns we document in wealth analysis are not simply a product of income or savings effects but are also driven by household behaviour regarding financial risk-taking and investment choices. Moreover, the negative impacts of automation on stock-market participation and wealth accumulation are only true for less-educated households, suggesting that rapid automation could further widen the wealth gap between high- and low-skilled individuals. The research highlights an important mechanism driving the negative effects of increased automation on household wealth accumulation and contributes to the discussion on the economic consequences of its increased use.
