Abstract ：
To examine how regulatory policies affect automation and inequality, we develop an endogenous growth model with two household types (workers and capitalists) and two R&D activities (innovation and automation). The two R&D activities generate au- tomated and nonautomated industries. The model features the unique balanced growth path (BGP). We consider two types of regulation for both industries: one that operates through prices and another that operates through production costs. The results show that tighter regulation in automated industries and more relaxed regulation in non-automated industries reduce inequality between workers and capitalists and improve the social wel- fare. The price-based regulation is more effective than the cost-based regulation in terms of the magnitude of the welfare improvement.

Keywords: Automation; Inequality; Price regulation; Schumpeterian growth
JEL Classification: E20; O31; O38