What? Automation – the replacement of labor with machines or AI - is one of the fundamental drivers of economic growth through its effect on productivity. It affects wages of workers, employment and returns to investment. The aim of this project is to incorporate these various distributional mechanisms into a new wave of macroeconomic models which incorporate realistic degrees of inequality. Why? Automation has the potential to generate large efficiency gains in terms of economic growth. However, because workers of different skill-levels, firms and investors are affected differently, it is not clear whether everyone benefits from such developments. Policy-recommendations should accurately reflect these trade-offs, to reap the full benefits of automation. How? The project will be carried out at the University of Zurich, which hosts some of the leading researchers studying the effects of automation. Here I will develop a new macroeconomic model, which matches important features of data on income and wealth inequality along with empirical evidence on the incidence of automation.