Adam Smith Business School

Dr Katja Mann, Copenhagen Business School

"Consumption Inequality in the Digital Age"
Thursday, 30 May. 3 pm
Room 356 Gilbert Scott Building

Abstract

This paper studies how digitalization affects consumption inequality. While previous literature has documented that technological change leads to U-shaped income polarization, we show that this pattern does not translate into consumption or welfare. This is due to price changes that are more beneficial for richer households. By assembling a novel dataset of digital technology in consumption, we establish several new stylized facts: First, high-income households consume a larger share of digitally produced products. Second, consumption items that rely more on digital inputs witness lower price inflation. Third, high-income households spend a larger share of their time on digital-intensive activities. Building on these findings, we present a structural model that quantifies the impact of digitalization on consumption inequality. The model weighs U-shaped income polarization against inflation rates that decrease with income. As a result, the welfare response to digitalization is J-shaped.

Bio

Katja Mann is an assistant professor of economics at Copenhagen Business School. In her work, she studies long-run macroeconomic topics such as automation and the future of work, demographic aging with its implications for pension systems and capital flows, and inequality. Katja holds a PhD from the University of Bonn. Her work has been published, among others, in the Review of Economics and Statistics and in the Review of International Economics.

 

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First published: 5 April 2024