If you try to give low-wage workers a bigger piece of the pie, companies just move faster to replace them with robots.
When the income of the bottom 50% rises, labor becomes more expensive relative to technology. This creates a massive incentive for companies to automate jobs, meaning redistribution inadvertently accelerates the rise of the machines.
Closing the Income Gap Opens the Door to Robots
SSRN · 6438484
Does reducing income inequality encourage automation? Using data from 25 countries over 1993-2019, we examine how redistribution affects automation, measured by the robot stock-to-employment ratio. To address endogeneity, we use an instrumental variables strategy and find that increasing the income share of the bottom 50% accelerates automation, whereas redistributing away from the top 1% dampens it. Considering both margins jointly, redistribution-induced declines in the Gini coefficient increa