The Anniversary Fund of the Oesterreichische Nationalbank (OeNB) is funding a research project on the Macroeconomic Effects of Digitalization in Austria (W4.0).
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At present, our society is widely believed to be in the fourth industrial revolution. The digitalization of the economy as a whole, which is referred to as "Industry 4.0" (I4.0) or (including services) as "Economy 4.0" (W4.0), will decisively change the economy. On the one hand, jobs will be replaced by automation, on the other hand, jobs will be created through growth effects and new occupations.
Recently, the debate has been fueled by empirical studies of the US and Europe, arguing that a substantial share of jobs is at “risk of computerization”. A host of recent empirical studies estimate that computer technologies put anywhere from 9% of jobs to 47% at risk of automation in the near future (for example, Arntz et al. (2016), Frey and Osborne (2017)). Thus, there is a widespread concern today that many jobs will be lost to these computer technologies as more human tasks can be performed by machines. This highlights the need for a thorough analysis of automation scenarios using comprehensive macroeconomic models to better understand the broader societal and economic impacts.
To study the economy-wide consequences of automation, the project will use the IIASA macroeconomic agent-based model, which is able to compete with standard models (econometric and Dynamic Stochastic General Equilibrium (DSGE)) in out-of-sample forecasting. The aim of the model-based analysis is to estimate the macroeconomic effects of digitalization in Austria in general by means of scenario analysis until 2035, as well as to give an evaluation of possible policy options.
The W4.0 project was funded together with 19 research projects with a total funding sum of EUR 3.5 million by the Anniversary Fund of the Austrian National Bank (OeNB) in the first decision meeting in 2022. The Anniversary Fund was established in 1966 to mark the bank’s 150th anniversary. Since then, it has provided a total of 10,100 projects in basic Research with funding of some EUR 825 million.