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A paper by IMF researchers (but not an official position of the IMF) has found that automation will lead to higher inequality under all scenarios they considered.

Even in the scenario where robots only compete for some jobs, and the impacts on wages and growth are reduced, the IMF paper said inequality gets worse.

"Allowing for tasks that complement robots does not help as much as one might think, partly because more and more workers compete for those jobs, driving down the overall wage.

"In addition to the fall in the average wage and the rise in the capital share, unskilled workers suffer large decreases in absolute and relative wages."

Even in areas where robots can't compete, the news isn't great from the IMF team.

"This also does not really help, again because there are only so many of those jobs to go around, and labour chased out of the automatable sector tends to drive down wages."

There are two more reports I found (which I haven't look at in much detail), one from UBS and one from BAML which point to the same thing: auotmation drives inequality.

So, is there any research coming up with the opposite conclusion, i.e. that automation can/will reduce inequality? (And I mean to inquire about research based on some modelling, not just some "just so story").

Ref: Andrew Berg; Edward F Buffie; Luis-Felipe Zanna, (May 21, 2018) "Should We Fear the Robot Revolution? (The Correct Answer is Yes)", IMF Working Paper No. 18/116

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  • $\begingroup$ I am fairly certain that the model used was too static. Great leaps in productivity have occurred multiple times in the past and even though there is great friction when change is fast, in the end almost everyone is better off than before. $\endgroup$ – Klas Lindbäck Aug 17 '18 at 10:08
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    $\begingroup$ @KlasLindbäck: that conclusion (tide raises all the boats) is not the same as inequality not increasing. Both can happen at the same time, i.e. inequality can go up and everyone be better of in an absolute sense (e.g. decrease in absolute poverty). $\endgroup$ – Fizz Aug 17 '18 at 10:11
  • $\begingroup$ Agreed. I looked at official statistics on income through the gapminder tool and it appears income inequality has increased greatly in the richest countries in the last 20 years. Social welfare and unemployment compensation levels has not risen as fast as average income. So while capital owners have seen greatly increased income, skilled workers have seen increased income, people living on wellfare have seen very little change. $\endgroup$ – Klas Lindbäck Aug 17 '18 at 10:56

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