Title page
Contents
ABSTRACT 2
I. INTRODUCTION 5
II. LITERATURE 7
A. Empirical Studies on the Impact of Automation on Employment and Income Distribution 7
B. Impact of the COVID-19 Crisis on Employment, Income Distribution, and Market Power 8
C. Policy Impact to Address the Trade-off of Automation by Quantitative Models 9
III. THE MODEL AND POLICY PACKAGES 11
A. The Model 11
B. Policy Packages 12
IV. TRANSITION DYNAMICS OF A MODEL ECONOMY WITH POLICY PACKAGES 14
A. Baseline 15
B. Tax-and-Redistribute Group of Policy Packages 16
C. Tax-and-Invest Group 17
D. Non-Fiscal Measure Group 19
V. COMPARING WELFARE ACROSS POLICY PACKAGES DURING TRANSITION 20
A. Income and Inequality 21
B. Disposable Income of the Two Types of Workers 23
C. Equally Distributed Equivalent Income (EDEI) 24
D. Social Welfare Based on Utility Function 25
VI. ENDOGENOUS MARK-UP-AN ILLUSTRATIVE EXAMPLE 26
A. Relationship Between Automation and Price Mark-up 26
B. Impact of Endogenous Mark-up on Production Efficiency: Two Additional Transmission Channels 27
C. Welfare Implications of the Endogenous Mark-up 28
VII. SENSITIVITY ANALYSIS 30
VIII. SUMMARY OF THE RESULTS AND POLICY IMPLICATIONS 34
REFERENCES 38
ANNEX I. FULL DESCRIPTION OF THE POLICY PACKAGES 44
Figure 1. Growth Accounting: Baseline 15
Figure 2. Disposable Income Decomposition: Baseline 15
Figure 3. Raising Tax on Capital Income 18
Figure 4. Wealth Tax 18
Figure 5. Consumption Tax 18
Figure 6. Robot Tax 18
Figure 7. Raising Tax on Mark-up 19
Figure 8. Growth Accounting: Lowering Tax on Unskilled Wage 19
Figure 9. Raising Tax on Capital Income for Education Spending 19
Figure 10. Growth Accounting: Rigid Unskilled Wage 19
Figure 11. Exogenous Mark-up: Income and Inequality 22
Figure 12. Exogenous Mark-up: Disposable Incomes 23
Figure 13. Equally Distributed Equivalent Income 24
Figure 14. Social Welfare Function 25
Figure 15. Robot Tax 28
Figure 16. Raising Tax on Mark-up 28
Figure 17. Endogenous Mark-up: Income and Inequality 29
Figure 18. Endogenous Mark-up: Disposable Incomes 29
Figure 19. Equally Distributed Equivalent Income 29
Figure 20. Social Welfare Function 29
Figure 21. Evolution of Economic Variables in the Sensitivity Analysis 31
Figure 22. Income and Inequality 33
Figure 23. Disposable Incomes 33
Figure 24. Equally Distributed Equivalent Income 34
Figure 25. Social Welfare Function 34
Figure 26. Desirable Policy Packages 35