Transcript Labor demand perspectives in the time of robots

Current Issues in Economics
Labor demand perspectives in the
time of robots
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Internet Economy: To remember
• Positive:
– Better use of resources
• Use of idle resources (prosumption)
• Replacing traditional channels of commerce
– New near-free services and goods
• Negative:
– Market segmentation
– Inefficient national regulation
– Systemic instability
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Labor demand perspectives in the
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Labor demand perspectives in the
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Labor demand perspectives in the time of robots
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Labor demand perspectives in the time of robots
"We are being afflicted with a new disease of
which some readers may not yet have heard the
name, but of which they will hear a great deal in
the years to come – namely, technological
unemployment. This means unemployment due
to our discovery of means of economizing the
use of labor outrunning the pace at which we
can find new uses for labor.” Keynes, John
Maynard (1930) Economic Possibilities for our
Grandchildren
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Labor demand perspectives in the
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• If we add globalization to Keynes inside, we
receive Brexit and Trump election
• This is however „a small game” when
compared with what’s in waiting: robotization,
AI, Internet of things
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Labor demand perspectives in the time of robots
For decades, people have been predicting how the
rise of advanced computing and robotic
technologies will affect our lives, but expectations
differ:
– Some look forward to the vast economic
opportunities that robots will present, claiming, for
example, that they will improve productivity or take
on undesirable jobs.
– Others are warnings that robots will displace humans
in the economy, destroying livelihoods, especially for
low-skill workers.
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Labor demand perspectives in the time of robots
Is the Luddite fallacy still at work or we are at “the
second half of the chessboard?”
• Early concern about technological unemployment was
exemplified by the Luddites, textile workers who feared
that automated looms would allow more productivity
with fewer workers, leading to mass unemployment.
• It happened: at local scale: highly skilled artisans were
replaced by low skills workers
• But on national scale: while automation did lead to
textile workers being laid off, new jobs in other
industries developed, and the society gained as a
whole
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Labor demand perspectives in the time of robots
In 2014, Pew Research canvassed 1,896
technology professionals and economists and
found a split of opinion:
• 48 percent of respondents believed that new
technologies would displace more jobs than
they would create by the year 2025,
• 52 percent maintained that they would not.
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Labor demand perspectives in the time of robots
“The “dark side” of productivity growth because
of automation is merely another form of the
Luddite fallacy – the idea that new technology
destroys jobs. If the Luddite fallacy were true we
would all be out of work because productivity
has been increasing for two centuries’ “
marginalrevolution.com
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Labor demand perspectives in the time of robots
"There are many reasons to think the software
revolution will be even more profound than the
agricultural revolution. This time around, change
will come faster and affect a much larger share of
the economy. [...] [T]here are more sectors losing
jobs than creating jobs. And the general-purpose
aspect of software technology means that even the
industries and jobs that it creates are not forever.
[...] If current trends continue, it could well be that
a generation from now a quarter of middle-aged
men will be out of work at any given moment.“
Larry Summers WSJ 2014
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Labor demand perspectives in the time of robots
Jobless recoveries: what?
• The fact that employment is recovering much
slower than GDP is a relatively new
phenomenon jobless recoveries have only
really occurred after the recessions after 1991
• It is a distinct break from previous postwar
episodes of recession when both GDP and
employment would vigorously rebound
following recessions
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Labor demand perspectives in the time of robots
Jobless recoveries: why?
• Disappearance of routine occupations. In the mid-1980s,
about one in three Americans was employed in a routine
occupation. Currently, that figure stands at one in four.
• Labor market mismatch? Tertiary education means lower
unemployment and faster income growth
• Polarization of labor market. All employment growth of the
past 30 years has either been in ‘non-routine’ occupations
located at the high-end of the wage distribution, such as
software engineers and managers, or in low-paying jobs,
such as service occupations like restaurant waiters and
janitors.
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Labor demand perspectives in the time of robots
Robotization 1st step:
• Robots and automation have been in many
types of manufacturing for decades. In the US
and China fewer people work in
manufacturing today than in 1997.
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Labor demand perspectives in the time of robots
Robotization 2nd step:
• A change with a potentially far larger impact
on employment, is taking place in clerical
work and professional services. Countless
traditional white-collar jobs, such as many in
the post office and in customer service, have
disappeared.
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Labor demand perspectives in the time of robots
Robotization 3rd step:
Technologies like the Web, artificial intelligence,
big data, and improved analytics are automating
many non-routine tasks.
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Labor demand perspectives in the
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• Robotization 4th step:
Robots will make autonomous decisions
(self-driving car dillema)
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Labor demand perspectives in the time of robots
Looking into the future:
• “It will change every profession in ways we
have barely seen yet,” B. Arthur. Santa Fe
Institute
• “Artificial Intelligence could end human race”
Stephen Hawking, University of Cambridge
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Labor demand perspectives in the time of robots
Giving up to robots (MIT 2014) http://tiny.cc/k4hzgx
• In manufacturing, advanced robotic technology has opened up the
possibility of integrating highly autonomous mobile robots into
human teams.
• With this capability comes the issue of how to maximize both team
efficiency and the desire of human team members to work with
robotic counterparts.
• Our results indicate that workers prefer to be part of an efficient
team rather than have a role in the scheduling process, if
maintaining such a role decreases their efficiency.
• These results provide guidance for the successful introduction of
semi-autonomous robots into human teams.
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Labor demand perspectives in the time of robots
How and were labor can survive?
Six ways that humans have historically created value, through:
• our legs and other large muscles move things to where we
need them to be
• our fingers, can rearrange them into useful patterns
• our mouths, our words, whether spoken or written –
enable us to inform and entertain one another
• our brains, regulate routine activities, keeping the leg- and
finger-work on track
• our smiles, help us to connect with others
• our minds – our curiosity and creativity – identify and
resolve important and interesting challenges.
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Labor demand perspectives in the time of robots
• So the question is not whether robots and
computers will make human labor in the goods,
high-tech services, and information-producing
sectors infinitely more productive. They will.
• What really matters is whether the jobs outside
of the robot-computer economy – jobs involving
people’s mouths, smiles, and minds – remain
valuable and in high demand. B. de Long
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Labor demand perspectives in the time of robots
Wages in the time of robots: time of incomes
increase
• From 1850 to 1970 or so, rapid technological
progress first triggered wage increases in line
with productivity gains.
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Labor demand perspectives in the time of robots
Wages in the time of robots: time of incomes
distribution (middle class)
• Then came the process of income-distribution
equalization, as machines, installed to substitute
for human legs, and fingers created more jobs in
machine-minding, which used human brains and
mouths, than it destroyed in sectors requiring
routine muscle power or dexterity work.
• Rising real incomes increased leisure time,
thereby boosting demand for smiles and the
products of minds.
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Labor demand perspectives in the time of robots
Wages in the time of robots: what next?
• Future employment growth will be concentrated
among the jobs that cannot be automated, particularly
in services, which have to be delivered physically.
• The US Bureau of Labor Statistics estimates that among
the most rapidly growing occupational categories over
the next ten years will be “healthcare support
occupations” (nursing aides, orderlies, and attendants)
and “food preparation and serving workers” – that is,
overwhelmingly low-wage jobs.
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Labor demand perspectives in the time of robots
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Labor demand perspectives in the time of robots
Some jobs to be lost : hollowing the center
• Back in 2012, Amazon acquired Kiva Systems,
a maker of robots that can be programmed to
pick up online orders in a warehouse and
shuttle them to their departure points.
• Google autonomous vehicle technology is
accelerating, and for now, is focused on
passenger vehicles; but the real labor shortage
is in long-haul trucking or agriculture
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Labor demand perspectives in the time of robots
Inequality in the time of robots
• As computer-processing power grows and artificialintelligence software advances, machines are increasingly
able to perform complex tasks requiring abstract thinking,
such as inferring meaning and making judgments, far
beyond routine physical and clerical activities.
• As a result, companies are beginning to automate more
highly skilled knowledge-based jobs in fields like law and
medicine.
• While this process will generate a significant amount of
value – more than $5 trillion in 2025, according to MGI
estimates – it will not be distributed evenly.
McKinsey Global Institute
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Labor demand perspectives in the time of robots
What to do?
• Workers must come to terms with the imperative
of life-long learning Companies must anticipate
and adapt to rapid change
• Governments will need to:
– meet new demands for education and training
– implement effective mechanisms for regulating, say,
self-driving cars or the use of genomic data to develop
personalized drugs
But is it feasible?
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Labor demand perspectives in the time of robots
Growth remedy or growth problem
Job Growth = Output Growth — Productivity Growth
• Technology is destroying jobs faster than economy is
creating new ones when output growth is too slow
• Before we can assess the state of technological
unemployment, we have to get rid of bad policyinduced unemployment.
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