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Electoral politics over automation in a dual economy

  • Durham University

Research output: Contribution to journal › Article › peer-review

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Abstract

When automation in a developing economy displaces low-skilled workers in the advanced sector, backward sector wages may fall due to in-migration of the ‘newly’ unemployed. Fear of job and income loss may then induce office-seeking political parties to announce regulatory policies on automation for electoral success. We show that absent sectoral spillover, democratic adoption of automation is relatively higher and protects only high-skilled jobs in the advanced sector. However, the possibility of spillover limits this adoption. More specifically, if the backward sector is large, automation faces full resistance. In contrast, if the advanced sector is large, automation is moderate, making only the low-skilled jobs vulnerable. But these vulnerable workers, unlike their counterparts in the backward sector, may prefer automation because their advanced-sector wages fall below the severance pay plus backward-sector opportunities. When neither sector is large, the size of automation becomes uncertain, pushing similar economies into different growth paths.
Original languageEnglish
Article number103693
JournalJournal of Development Economics
Volume179
Early online date25 Nov 2025
DOIs
Publication statusPublished - 1 Feb 2026

Data Availability Statement

No data was used for the research described in the article.

Funding

No associated funding

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

  1. SDG 8 - Decent Work and Economic Growth
    SDG 8 Decent Work and Economic Growth

Keywords

  • Artificial intelligence
  • Automation
  • Displacement
  • Dualism
  • Elections
  • Reverse migration
  • Unemployment

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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