AUTOMATION TECHNOLOGY AND INCOME INEQUALITY: A PANEL DATA ANALYSIS. (2011-2022)

Abstract

We examine the impact of automation on income inequality in five industrialized countries: the United States, Germany, Japan, South Korea, and China from 2011 to 2022, a time marked by significant advancements in robotic technologies. Our analysis reveals that the penetration of automation has led to increased income inequality, particularly affecting lower-skilled workers and certain demographic groups. By employing a GMM model and utilizing data from the International Federation of Robotics and World Bank Development Indicators, we find that while automation negatively influences wage distribution, educational improvements can help mitigate the effect on income inequality. Additionally, proactive policy actions and educational retraining initiatives are essential for reducing the negative impacts and promoting fair economic development.