Robots, Structural Change, and Employment: Future Scenarios

Living reference work entry


A parsimonious multisectoral, multioccupational agent-based model is developed to study the impact of robotization on employment and wages. Hereby the effects of three policy interventions are studied: a universal basic income, a robot tax, and stimulating spawning of new sectors combined with increasing dynamic efficiency through labor mobility. It is found that robotization results in lower unit production costs and lower product prices, thus softens wage competition across sectors, and thereby causes stagnation of wages and possibly an income gap between low- and high-skilled occupations. However, the emergence of new sectors results in (sectoral) labor shortages and thus induces price-wage spirals effectively breaking away from wage stagnation and inducing “vacancy chains” in which workers migrate to more advanced occupations/sectors. Given these different effects of robotization, policy interventions are to be differentiated between economies with labor surplus and labor scarcity. In case of labor surplus, robotization will exacerbate unemployment and cause wage stagnation, such that it is commendable to tax robots to prevent robotization, a universal basic income to stimulate product and labor demand, and to stimulate innovation to create new sectors mopping up the unemployed. Under labor scarcity, wages are high and further escalate, which (i) invites technological substitution and (ii) slows down sector emergence, both reducing wage competition and labor utilization. In this case, robotization “frees up” labor, resolves labor shortages, reduces vacancies in new sectors, and relieves firms from (fierce) wage competition. In this case, a universal basic income exacerbates labor shortages, robot tax sustains fierce wage competition, and new sectors increase labor demand, such that these interventions are discommended. While there are indications of a basin of attraction for Schumpeterian creative-destruction at high employment levels, policy interventions may well be required to increase the dynamic efficiency of returning to those levels of employment through structural change and enhanced labor mobility.


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Authors and Affiliations

  1. 1.Institute of EconomicsUniversity of HohenheimStuttgartGermany
  2. 2.Faculty of GeosciencesUtrecht UniversityUtrechtThe Netherlands

Section editors and affiliations

  • Marco Vivarelli
    • 1
  1. 1.Department of Economic PolicyUniversità Cattolica del Sacro CuoreMilanoItaly

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