Microsoft founder Bill Gates proposed a radical idea by claiming that governments should impose a “robot tax” in order to save human employment and to make up for the tax losses accrued due to automation. While this was generally met with derision, a team of researchers led by a finance professor from Kellogg decided to go behind the scenes and test this scenario. During this business research, they found out, much to their surprise that the income gap will actually increase as a result of increasing automation. Routine workers will suffer most as their jobs are easily replaceable by machines, so they will need to work at constantly reducing real wages. Non-routine workers such as scientists and doctors though will prosper as their expenses will go down and robots are able to perform routine tasks at a far quicker pace. To put things into perspective, the US economy already is suffering as a result of inequality with real wages having increased only for college graduates since 1979, but depressed for every other educational group. In the long run, the income of non-routine workers will also go down as they will have fewer people to lend their services to as a result of generally lowered wages. Real production will not rise then. South Korea so far is the only country to have introduced such a robot tax.

Source:https://insight.kellogg.northwestern.edu/article/how-a-robot-tax-could-reduce-income-inequality/amp?__twitter_impression=true

Uploaded Date:19 January 2018