Automation and income inequality in Europe

9 October 2023

We study the effects of robot penetration on household income inequality in 14 European countries between 2006–2018, a period marked by the rapid adoption of industrial robots. We establish that, similarly to the United States, automation reduced relative hourly wages and employment of directly affected European demographic groups. We then use the estimated wage and employment shocks as input to the EUROMOD microsimulation model to assess how robot-driven shocks affected household income inequality. Automation had very small effects on income inequality. Household risk-sharing and tax and welfare policies largely absorbed wage and employment shocks caused by automation.

keywords: robots, automation, tasks, income inequality, wage inequality, microsimulation
JEL codes: 
publication year: 2023
language: english
Publications category: 
publishing series: IBS Working Paper
publication number: 06/2023
ISSN: 2451-4373
Additional information:

We thank Karol Madoń for excellent research assistance. We thank Mikkel Barslund, Sydnee Caldwell, David Card, Cristiano Perugini, Vegard Skirbekk, and participants of the SOLE Annual Meeting 2023, TASKS VI, Untangled, and DIMJOB conference for their comments. This paper uses Eurostat data. Eurostat has no responsibility for the results and the conclusions, which are those of the authors. This project has received funding from the European Union’s Horizon 2020 Research and Innovation Programme under grant agreement No. 1001004776. Jan Gromadzki acknowledges funding from the Polish-U.S. Fulbright Commission.

Projects related to this publication:

Institute for Structural Research (IBS), Warsaw School of Economics (SGH), IZA (Bonn, Germany).

Institute for Structural Research (IBS)

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