Fostering a sustainable digital transformation

Abstract

Automation and digitalisation are progressing rapidly worldwide, auguring improved productivity and living standards but also the prospect of genuine social harm. This column discusses two side effects of automation – increased inequality and a rise in carbon emissions – and proposes a policy response to deal with both problems simultaneously. By imposing a higher tax on automation-driven emissions and redistributing the proceeds so as to mitigate increased inequality through education and re-training, such a policy could reduce resistance to new technologies, increase skill levels, and foster the transition to cleaner electricity production.