Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322362 
Authors: 
Year of Publication: 
2025
Series/Report no.: 
NBB Working Paper No. 475
Publisher: 
National Bank of Belgium, Brussels
Abstract: 
I evaluate the link between automation and the rise in top income concentration when inequality matters for macro. The novel mechanism is that automation redistributes income towards high-wealth households who save more, which lowers the interest rate and incites firms to automate more. To operationalize this, I build a tractable heterogeneous-agent model (1) with wealth in the utility function as a luxury good, and (2) a firm-side choice on automation. I find that introducing realistic savings rate heterogeneity largely eliminates the need for ad hoc technology shifts. Rather, automation is the outcome of increased top income concentration, not just its driver.
Subjects: 
automation
wealth inequality
capitalist spirit
task-based production
heterogeneous-agent
JEL: 
E25
J23
O33
Document Type: 
Working Paper

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