Automation and income inequality in Europe
We study the effects of robot penetration on household income inequality in 14 European countries between 2006–2018. We find that, similarly to the United States, automation reduced relative hourly wages and employment of directly affected European demographic groups. We then use the estimated wage and employment shocks as input to the EUROMOD microsimulation model to assess how robot-driven shocks affected household income inequality. Automation had tiny effects on income inequality. Transfers played a key role in cushioning the transmission of these shocks to household incomes.