Working Paper: NBER ID: w23806
Authors: João Guerreiro; Sérgio Rebelo; Pedro Teles
Abstract: Using a quantitative model that features technical progress in automation and endogenous skill choice, we show that, given the current U.S. tax system, a sustained fall in automation costs can lead to a massive rise in income inequality. We characterize the optimal tax system in this model. We find that it is optimal to tax robots while the current generations of routine workers, who can no longer move to non-routine occupations, are active in the labor force. Once these workers retire, optimal robot taxes are zero.
Keywords: robots; taxation; automation; income inequality
JEL Codes: H21; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sustained fall in automation costs (O49) | rise in income inequality (D31) |
| rise in income inequality (D31) | disadvantaging routine workers (J79) |
| optimal taxation of robots (H21) | redistribute income towards routine workers (D33) |
| robot taxes (L63) | alleviate income disparity exacerbated by automation (E25) |
| current US tax system (H20) | welfare decline for routine workers (F66) |
| optimal robot tax in 2018, 2028, 2038 (H21) | aid current routine workers (J68) |
| current routine workers retire (J26) | optimal robot tax projected to be zero (H21) |
| automation increases overall tax revenue (H29) | robot taxes as a tool for redistribution (H23) |