Automation, market power, and the citizen dividend: a DSGE-HANK with antitrust and a citizen sovereign wealth fund

Scavino Alfaro, Vicenzo (2025): Automation, market power, and the citizen dividend: a DSGE-HANK with antitrust and a citizen sovereign wealth fund.

Abstract

This paper develops a DSGE model with heterogeneous households (HANK) to study how automation shocks psi_t affect the functional distribution of income and inequality when (i) substitution between effective labor and automated capital and (ii) aggregate market power, captured by markups disciplined by antitrust enforcement with real resource costs, coexist. Households face idiosyncratic risk, liquidity constraints, and mobility frictions, and dynamically choose an occupational/sectoral path j; automation can also affect effective productivity heterogeneously across paths. On the policy side, a Citizen Sovereign Wealth Fund partially captures rents associated with automation and market power and finances an in-kind floor and a citizen dividend under explicit operational rules (non-negativity, feasibility, and an institutional cap on public equity ownership). The main contribution is a fully closed framework in terms of timing, detrending, and ex-dividend flow-of-funds, delivering transparent theoretical predictions for the labor share, inequality, and the transmission of technological shocks under heterogeneity, along with a methodological appendix to guide future empirical implementations.

• Item Type: MPRA Paper
• Language: English
• Keywords: automation, artificial intelligence, HANK, market power, markups, antitrust, sovereign wealth fund, citizen dividend, occupational mobility
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; L - Industrial Organization > L4 - Antitrust Issues and Policies > L41 - Monopolization ; Horizontal Anticompetitive Practices; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

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