The Role of Education in Mitigating Automation’s Effect on Wage Inequality

Abstract

While automation has renewed the debate about labor market policy responses to inequality and job losses, less attention has been given to education policy. We present a general equilibrium model and empirical evidence showing how education mitigates wage inequality resulting from a recent, worst‐case expectation of technology’s ability to automate job tasks. Our model predicts that education could reduce automation’s marginal effect on the wage gap between lower‐ and higher‐skilled labor by up to 3 percentage points. Education policies that promote automation‐complementing skill formation would reduce the need for costly labor market and wealth redistribution interventions later in life.

Long-lived consequences of rapid scale-up? The case of free primary education in six Sub-Saharan African countries

“…Many countries, particularly in Sub-Saharan Africa, implemented a Free Primary Education Policy (FPE) reform in order to increase access and completion (Sifuna 2016). These decisions were partly influenced by research showing that school fees were being identified as a barrier to enrollment, particularly among the poor (e.g., Bentaouet Kattan and Burnett 2004;Watkins 2000).…”

Education Quality, Green Technology, and the Economic Impact of Carbon Pricing

“…The elasticity of skill supply in the economy may act as mitigating factor both for the impact of carbon pricing on emissions reduction and on economic outcomes including wage inequality and output. This argument is parallel to skills and automation: if automation complements higher skilled workers' productivity, then the elasticity of skill supply, for example through the quality of education, enhances the economic benefits and mitigates costs of automation (Bentaouet Kattan, Macdonald and Patrinos 2020).…”