You have been terminated: robots, work, and taxation

We present a three sector OLG model with a homogeneous output good that is produced with traditional or robot technology. The traditional sector produces with labor and capital, whereas the modern sector employs robots instead of labor. Robots and workers are modeled as perfect substitutes to investigate whether economic policy under the harshest assumptions is able to prevent the ascent of a robotized economy. While we find that the transition is inevitable, higher taxes on robots and revenues can slow down the process. We also that the economy will switch from an exogenous growth model based on TFP to an endogenous growth model due to constant returns with respect to reproducible factors of production as it becomes fully robotized.