You Have Been Terminated: Robot Taxation and the Welfare State

16 Pages Posted: 23 Feb 2022 Last revised: 24 Feb 2022

See all articles by Gizem Akar

Gizem Akar

Vienna University of Economics and Business

Giorgia Casalone

University of Piemonte Orientale

Martin Zagler

University of Piemonte Orientale - Facoltà di Economia; Vienna University of Economics and Business - Department of Economics

Date Written: February 2022

Abstract

We present a three sector OLG model with a homogenous output good that is produced with traditional or robot technology. The traditional sector produces with labor and capital, whereas the modern sector employs robots instead of labor. We find that little can prevent the ascent of a modern economy. In particular, whilst robots are perfect substitutes to labor in our model, it is only the ratio of robot to capital taxes that can influence the speed of transition. The robotics sector produces robots using the homogeneous output good. We find that wages fall with a relative increase in productivity in the modern sector and a decrease in market power of robot suppliers. Falling wages imply that consumption will fall through generations, and a utilitarian government would feel inclined to intervene. We present several welfare policies, from wage subsidies, unemployment benefits, pensions, to a universal basic income. We also show under which conditions, as the economy becomes fully roboterized, it will switch from an exogenous growth model based on TFP to an endogenous growth model due to constant returns with respect to reproducible factors of production.

Keywords: Robots, Singularity, Robot Taxation, Economic Growth

JEL Classification: O40, O33, H11

Suggested Citation

Akar, Gizem and Casalone, Giorgia and Zagler, Martin, You Have Been Terminated: Robot Taxation and the Welfare State (February 2022). WU International Taxation Research Paper Series No. 2022-05, Available at SSRN: https://ssrn.com/abstract=4040134 or http://dx.doi.org/10.2139/ssrn.4040134

Gizem Akar

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Giorgia Casalone

University of Piemonte Orientale

Rectory, via Duomo
Novara, 6-13100
Italy

Martin Zagler (Contact Author)

University of Piemonte Orientale - Facoltà di Economia ( email )

Via Perrone, 18
Novara, 28100
Italy

Vienna University of Economics and Business - Department of Economics ( email )

Augasse 2-6
A-1090 Wien
Austria

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