Unemployment: Automation, Monopolistic and Bargaining Power

Abstract

Abstract In this study, we mainly focus on the linkages between automation and unemployment under other unemployment generating structural mechanisms, which arise out of monopolistic power of firms in goods market and union power in labor market. For this, we construct a static general equilibrium model with a two-sector framework. Penetration of automation creates a widespread spillover effects on unemployment, wages of workers having different skill levels, resource allocation and income inequality. The existence of monopolistic power and union bargaining affects the way in which automation affects the variables of interest, in particular unemployment. It seems that automation turns out to be very good for growth and very bad for employment and equality. JEL Classication: O33, J63, J64, D30, J51