Giving the lowest-paid workers a raise actually makes it more profitable for a company to just fire them and hire a robot instead.
April 10, 2026
Original Paper
Closing the Income Gap Opens the Door to Robots
SSRN · 6438484
The Takeaway
It is intuitive to think that a fairer economy protects workers from automation. However, when the bottom half of society gets wealthier, they often work fewer hours, which creates a labor shortage that forces companies to invest in industrial robots faster.
From the abstract
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