The Demand Externality of Automation
Fuente:
arXiv
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| Natura: | Preprint |
| Pubblicazione: |
2026
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| _version_ | 1866911652974166016 |
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| author | Bayraktar, Erhan |
| author_facet | Bayraktar, Erhan |
| contents | Automation raises productivity and reduces paid human labor, but it also reallocates income and ownership claims. This paper studies that tradeoff in a static benchmark and in a stationary heterogeneous-agent general equilibrium. Firms choose automation from a profit function. Households differ by skill and wealth, save in a capital/equity claim, and face incomplete insurance. Wages and returns are determined by market clearing from a Cobb--Douglas final-good firm, while the wealth distribution is pinned down by a Hamilton--Jacobi--Bellman (HJB) equation and a Kolmogorov forward equation (KFE). The paper is deliberately two-sided. With strong productivity growth, high-skill complementarity, low obsolescence, and broad ownership, automation raises output, capital, and consumption. With strong exposure of low-wealth, high-marginal-propensity-to-consume (high-MPC) households and concentrated ownership, privately chosen automation can be excessive even though it raises high-skilled labor income. The central object is the derivative of household consumption demand and collective wage bill with respect to automation. Fiscal policy is modeled as a government problem rather than as an abstract planner: a tax changes the firm's automation first-order condition, raises revenue only on the remaining automation base, and must specify rebates and administrative losses. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2605_05127 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | The Demand Externality of Automation Bayraktar, Erhan General Economics Economics Optimization and Control 91B50, 91B40, 91B70, 91A13, 91A15, 49L20, 35Q91, 65M06 Automation raises productivity and reduces paid human labor, but it also reallocates income and ownership claims. This paper studies that tradeoff in a static benchmark and in a stationary heterogeneous-agent general equilibrium. Firms choose automation from a profit function. Households differ by skill and wealth, save in a capital/equity claim, and face incomplete insurance. Wages and returns are determined by market clearing from a Cobb--Douglas final-good firm, while the wealth distribution is pinned down by a Hamilton--Jacobi--Bellman (HJB) equation and a Kolmogorov forward equation (KFE). The paper is deliberately two-sided. With strong productivity growth, high-skill complementarity, low obsolescence, and broad ownership, automation raises output, capital, and consumption. With strong exposure of low-wealth, high-marginal-propensity-to-consume (high-MPC) households and concentrated ownership, privately chosen automation can be excessive even though it raises high-skilled labor income. The central object is the derivative of household consumption demand and collective wage bill with respect to automation. Fiscal policy is modeled as a government problem rather than as an abstract planner: a tax changes the firm's automation first-order condition, raises revenue only on the remaining automation base, and must specify rebates and administrative losses. |
| title | The Demand Externality of Automation |
| topic | General Economics Economics Optimization and Control 91B50, 91B40, 91B70, 91A13, 91A15, 49L20, 35Q91, 65M06 |
| url | https://arxiv.org/abs/2605.05127 |