Technological Progress and Political Polarization

Headnote

Abstract

How does technological progress affect political polarization? For addressing this question, in an economy where taxation policy is selected by majority-rule voting and voters are differentiated by earning ability, each voter's own ideal taxation policy is obtained to measure political polarization as distance between left-wing and right-wing voters' ideal policies. Technological progress exacerbates political polarization, when it is capital-biased by increasing relative capital productivity. In contrast, technological progress does not affect political polarization, when it is unbiased by preserving relative factor productivity. Both biased and unbiased technological progresses do not affect politico-economic distortion, while only the former affects political polarization.

Keywords: Technological progress, Political polarization, Relative capital productivity, Politico-economic distortion.

JEL Classification: 033, D72, E62.

Resumen

Como afecta el progreso tecnologico a la polarization politica? Para responder a esta pregunta, en una economia en la que la politica fiscal se elige por mayoria y los votantes se diferencian por su capacidad de obtener ingresos, se obtiene la politica fiscal ideal de cada votante para medir la polarization politica como distancia entre las politicas ideales de los votantes de izquierdas y de derechas. El progreso tecnologico exacerba la polarization politica cuando esta sesgado por el capital al aumentar la produc-tividad relativa del mismo. Por el contrario, el progreso tecnologico no afecta a la polarization politica, cuando es impartial al preservar la productividad relativa de los factores. Tan to el progreso tecnologico sesgado como el no sesgado no afectan a la distorsion politico-economica, mientras que solo el primero afecta a la polarization politica.

Palabras clave: progreso tecnologico, polarization politica, productividad.

Clarification JEL: 033, D72, E62.

1. Introduction

In the past decades, many advanced economies witnessed growing political polarization, as they encountered various forms of technological progress. For example, in the US, as numerous technological advancements increased total factor productivity and relative capital productivity, ideological distance between left-wing and right-wing politicians significantly widened, as demonstrated by Figure 1 and 2.1 As production technology innovation alters the way resource is allocated and distributed, individuals can change their own ideal economic policy, which may make society more polarized. It is important to understand whether and how technological progress affects political polarization. Nonetheless, to date, there is no rigorous study on the relation between technology change and political polarization....