Discussion of the paper by Joao Guerreiro (Northwestern University) Sergio Rebelo (Northwestern University, NBER and CEPR), Pedro Teles (Católica-Lisbon School of Business & Economics, Banco de Portugal and CEPR)

1. Should Robots be Taxed?
Joao Guerreiro, Sergio Rebelo and Pedro Teles
Discussion by Lukas Mayr
November 17, 2017

2. The Paper
Routine Labor Non-Routine Labor
2

3. The Paper
Routine Labor Non-Routine LaborRobots
3

4. Decreasing costs of automation
Routine
Labor
Non-Routine LaborRobots
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5. Tax robots ...
Routine
Labor
Non-Routine LaborRobots
5

6. ... or let automation happen?
Non-Routine LaborRobots
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7. Mirrleesian taxes
Proposition
In the optimal plan, when automation is incomplete (m < 1) robot taxes
are strictly positive (τx > 0)
7

8. Mirrleesian taxes
Proposition
In the optimal plan, when automation is incomplete (m < 1) robot taxes
are strictly positive (τx > 0)
Increase in τx reduces the relative wage wn/wr
7

9. Mirrleesian taxes
Proposition
In the optimal plan, when automation is incomplete (m < 1) robot taxes
are strictly positive (τx > 0)
Increase in τx reduces the relative wage wn/wr
Makes non-routine worker less inclined to mimic the routine worker
7

10. Mirrleesian taxes
Proposition
In the optimal plan, when automation is incomplete (m < 1) robot taxes
are strictly positive (τx > 0)
Increase in τx reduces the relative wage wn/wr
Makes non-routine worker less inclined to mimic the routine worker
???
7

11. Mirrleesian taxes
Proposition
In the optimal plan, when automation is incomplete (m < 1) robot taxes
are strictly positive (τx > 0)
Increase in τx reduces the relative wage wn/wr
Makes non-routine worker less inclined to mimic the routine worker
???
Incentive compatibility constraint for non-routine workers
u(Cn) − v(Nn) ≥ u(Cr) − v
wrNr
wn
7

12. Routine Worker: Assembly Line Worker
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13. Non-Routine Worker: Engineer
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14. Example
Fabric worker (assembly-line work) and engineer
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15. Example
Fabric worker (assembly-line work) and engineer
With τx = 0: wr = 10 USD/hour and wn = 40 USD/hour
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16. Example
Fabric worker (assembly-line work) and engineer
With τx = 0: wr = 10 USD/hour and wn = 40 USD/hour
⇒ Engineer gets 40 USD if he works an hour on the assembly line
10

17. Example
Fabric worker (assembly-line work) and engineer
With τx = 0: wr = 10 USD/hour and wn = 40 USD/hour
⇒ Engineer gets 40 USD if he works an hour on the assembly line
With τx = 20%: wr = 15 USD/hour and wn = 30 USD/hour
10

18. Example
Fabric worker (assembly-line work) and engineer
With τx = 0: wr = 10 USD/hour and wn = 40 USD/hour
⇒ Engineer gets 40 USD if he works an hour on the assembly line
With τx = 20%: wr = 15 USD/hour and wn = 30 USD/hour
⇒ Engineer gets 30 USD if he works an hour on the assembly line
10

19. Example
Fabric worker (assembly-line work) and engineer
With τx = 0: wr = 10 USD/hour and wn = 40 USD/hour
⇒ Engineer gets 40 USD if he works an hour on the assembly line
With τx = 20%: wr = 15 USD/hour and wn = 30 USD/hour
⇒ Engineer gets 30 USD if he works an hour on the assembly line
⇒ Implicit assumption: Engineer always has the same marginal
productivity on the assembly line as he has with engineering
10

20. Mirrleesian taxes
Fixing the incentive compatibility constraint:
u(Cn) − v(Nn) ≥ u(Cr) − v(κNr)
κ is constant
Most sensible parameterization is κ = 1
⇒ Never tax robots!!!
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21. Some additional remarks
Interesting and highly relevant question
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22. Some additional remarks
Interesting and highly relevant question
Nice model set up with routine tasks as varieties
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23. Some additional remarks
Interesting and highly relevant question
Nice model set up with routine tasks as varieties
In Ramsey problems suddenly no informational problem anymore
12

24. Some additional remarks
Interesting and highly relevant question
Nice model set up with routine tasks as varieties
In Ramsey problems suddenly no informational problem anymore
HSV tax function but no transfers delivers result of no full
automation and positive optimal robot taxes almost by assumption
J Not sure if this is really the appropriate status quo
J There are at least some government transfers
12

25. Some additional remarks
Interesting and highly relevant question
Nice model set up with routine tasks as varieties
In Ramsey problems suddenly no informational problem anymore
HSV tax function but no transfers delivers result of no full
automation and positive optimal robot taxes almost by assumption
J Not sure if this is really the appropriate status quo
J There are at least some government transfers
Endogenous human capital formation
J Keeping demand for routine workers high by taxing robots
discourages human capital accumulation
12