Economics Seminar - Pensions under Automation

Event Date: 18 September 2024

Speaker: Dr Johan Gustafsson - Umeå School of Business, Economics and Statistics (USBE)

Time: 4-5:15pm

Location: TL553

Contact: Dr Jonathan Norris jonathan.norris@strath.ac.uk

Abstract: "We analyze the impact of increased automation on the distribution of pension benefits, and whether it merits reforming the size of the pension system. To this end, we build an overlapping generations model with heterogeneous agents. Automation is either conceptualized in a capital-skill-complementarity or task-based fashion. First, we explore the comparative static effects of increased automation on the retirement behavior and pension benefit size across different skill-groups. Second, we compare how the optimal size of public pensions changes with automation-driven growth and total factor productivity growth. We find that automation-driven growth increases inequality in public pension benefits, and inequality between private and public retirement savings. We also find that improved automation merits a bigger public pension system to reduce inequality and mandate savings for hand-to-mouth consumers who experience a lower equilibrium wage when displacement effects are accounted for."

Published: 25 September 2024