Automation increases income inequality, say Baker Institute experts

EXPERT ALERT

Jeff Falk
713-348-6775
jfalk@rice.edu

Avery Ruxer Franklin
713-348-6327
averyrf@rice.edu

Automation increases income inequality, say Baker Institute experts

HOUSTON – (Aug. 14, 2020) – Automation does not kill jobs, but it does increase income inequality, according to new research from Rice University’s Baker Institute for Public Policy.

Dagobert Brito, Rice Faculty Scholar in international economics at the Baker Institute, and Robert Curl, the Kenneth S. Pitzer-Schlumberger Professor Emeritus of Chemistry, are available to discuss the research with the news media.

Some jobs can’t be completely automated, but automation can make the workers doing those jobs more productive. However, when workers perform tasks that can be entirely automated, their wages essentially compete with “the marginal cost of automation,” the authors write.

“The wages of highly skilled workers grow because they are a complementary factor to automation,” they write. “Creating high-paying jobs for the rest of workers requires that the tasks necessary for these new jobs cannot be performed by automation.”

Inevitably, this wage inequality accelerates wealth inequality, the authors say.

“For the wealthy, additional income does not usually lead to a commensurate increase in consumption,” they wrote. “Our expectation is that automation will cause inequality in terms of wealth to grow enormously because middle-income and lower-income workers will consume almost all their income while the fraction of the income saved at the top will continue to increase.”

Automating any job affects the wage structure of every job, the authors conclude, raising some wages at the top but lowering the rest.

To schedule an interview with Brito or Curl or for more information, contact Avery Franklin, media relations specialist at Rice, at averyrf@rice.edu or 713-348-6327.

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Related materials:

Paper: https://www.bakerinstitute.org/media/files/files/b78932bb/wp-brito-curl-automation-080720.pdf

Brito bio: https://economics.rice.edu/faculty/dagobert-l-brito

Curl bio: https://chemistry.rice.edu/people/robert-curl

Follow Rice News and Media Relations via Twitter @RiceUNews.

Follow the Baker Institute via Twitter @BakerInstitute.

Founded in 1993, Rice University’s Baker Institute ranks as the No. 2 university-affiliated think tank in the world and the No. 1 energy think tank in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blog.bakerinstitute.org.

About Avery Ruxer Franklin

Avery is a media relations specialist in the Office of Public Affairs.