Do Robots Increase Wealth Dispersion?

91 Pages Posted: 22 Aug 2018 Last revised: 6 Feb 2022

See all articles by Francisco Gomes

Francisco Gomes

London Business School

Thomas Jansson

Sveriges Riksbank - Research Division

Yigitcan Karabulut

Frankfurt School of Finance & Management; CEPR

Date Written: August 13, 2018

Abstract

We document significant negative effects of exposure to increased automation at work on household wealth accumulation. Beyond the income and saving channels, we uncover a novel mechanism driving the negative wealth effects of automation that arises through the endogenous optimal portfolio decisions of households. We show both theoretically and empirically that households rebalance their financial wealth away from the stock market in response to increased human capital risk induced by pervasive automation, thereby attaining lower wealth levels and relative positions in the wealth distribution. Our evidence suggests that the portfolio channel amplifies the inequality-enhancing effects of increased automation.

Keywords: Portfolio choice, household wealth accumulation, robots, automation, labor income uncertainty.

JEL Classification: D31, J24, E21, D1, G11

Suggested Citation

Gomes, Francisco and Jansson, Thomas and Karabulut, Yigitcan, Do Robots Increase Wealth Dispersion? (August 13, 2018). Available at SSRN: https://ssrn.com/abstract=3229980 or http://dx.doi.org/10.2139/ssrn.3229980

Francisco Gomes

London Business School ( email )

Finance Department
Sussex Place - Regent's Park
London NW1 4SA
United Kingdom

HOME PAGE: http://sites.google.com/view/francisco-gomes/home

Thomas Jansson

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

Yigitcan Karabulut (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

CEPR ( email )

London
United Kingdom

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