Automation and the welfare state

Current advances in information technology have led to a significant substitution of routine work by capital. In a new working paper together with David Rueda we develop a simple theoretical framework in which individuals in routine task-intensive occupations prefer public insurance against the increased risk of future income loss resulting from automation. Moreover, we contend that this relation will be stronger for richer individuals who have more to lose from automation. We focus on the role of occupational elements of risk exposure and challenge some general interpretations of the determinants of redistribution preferences. We test the implications of our theoretical framework with survey data for 17 European countries between 2002 and 2012. We find vulnerability to automation to be more significant than other occupational risks emphasized in the literature.