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Could Automation Make Income Inequality Worse?

The efficiency from automation and computerization of work has the potential to eliminate certain kinds of jobs, particularly low-paid occupations. 

A recent Economic Synopses article by Sungki Hong and Hannah G. Shell looked at how growing automation could affect employment and income inequality. Analyzing the Gini coefficient (a common measure of income inequality) for three hypothetical automation scenarios, Hong and Shell found that automation increases income inequality because it tends to displace the lowest-paid workers. 

The authors warn that their analysis did not take into account the costs of automation or the flexibility of the labor market, but encourage policymakers and researchers to take a greater interest in the topic of automation and inequality.

Read the full article here