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Technological unemployment and income inequality: a stock-flow consistent agent-based approach

  • Laura Carvalho
  • Corrado Di GuilmiEmail author
Regular Article

Abstract

The paper presents a stock-flow consistent agent-based model with effective demand, endogenous credit creation, and labor-saving technological progress. The aim is to study the joint dynamics of both personal and functional distribution of income as a result of technological unemployment, together with the effect on household debt. Numerical simulations show the potentially destabilizing effect of technological unemployment and reveal that an increase in the profit share of income amplifies the negative effect of income inequality on the business cycle and growth. The sensitivity analysis provides indications on the effectiveness of possible mixes of fiscal and redistributive policies, but also demonstrates that the effectiveness of policy measures is strongly dependent on behavioral and institutional factors.

Keywords

Stock-flow agent-based consistent model Income inequality Functional distribution Technological unemployment Social imitation 

JEL Classification

C63 D31 E21 E25 

Notes

Acknowledgements

We thank Evgeniya Goryacheva for the excellent research assistance. We are also thankful to Andre Diniz and Andre Cieplinski who have helped us for the simulations of previous versions of this model. This paper presents an extension to the models built in Carvalho and Di Guilmi (2014) and Di Guilmi and Carvalho (2017), which themselves have largely benefited from comments from Daniele Tavani and Peter Skott, as well participants at the Eastern Economic Association, World Keynes Conference, FMM Conference, Crisis2016 and numerous seminar/workshop presentations. We also thank two anonymous reviewers whose comments have led to this improved version of the paper. Financial support by the Institute for New Economic Thinking is gratefully acknowledged.

Funding

This study was funded by the Institute for New Economic Thinking (INET Grant INO13-00007) and by the Business School of the University of Technology Sydney (grant 2210094).

Compliance with Ethical Standards

Conflict of interests

The authors declare that they have no conflict of interest.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of Sao PauloSao PauloBrazil
  2. 2.Economics Discipline GroupUniversity of Technology SydneySydneyAustralia
  3. 3.Centre for Applied Macroeconomic AnalysisAustralian National UniversityCanberraAustralia

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