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Techno-Unemployment

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Techno-Unemployment

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The objective of this paper is to examine the impact of information and communication technologies on employment. Recently there have been increasing concerns over how the accelerating development of artificial intelligence and automation will affect jobs.
Given this setting we specifically wish to answer the following questions:
What are the economic and political factors that may lead to the elimination of jobs through ICTs and automation?
Are new jobs being created better and is the turnover to new jobs fast enough to Shumpeter’s creative destruction?
Are public policies required to address this problem? If so, which policies?
In this paper relies on existing research to determine give us some insights about such debate.
The paper concludes with policy recommendations.

The objective of this paper is to examine the impact of information and communication technologies on employment. Recently there have been increasing concerns over how the accelerating development of artificial intelligence and automation will affect jobs.
Given this setting we specifically wish to answer the following questions:
What are the economic and political factors that may lead to the elimination of jobs through ICTs and automation?
Are new jobs being created better and is the turnover to new jobs fast enough to Shumpeter’s creative destruction?
Are public policies required to address this problem? If so, which policies?
In this paper relies on existing research to determine give us some insights about such debate.
The paper concludes with policy recommendations.

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Techno-Unemployment

  1. 1. TECHNO- UNEMPLOYMENTMartha Garcia-Murillo Ian MacInnes Johannes Bauer
  2. 2. SUPPLY (Technology, outsourcing) DEMAND (populationgrowth, marketing,net exports) SUPPLYDEMAND
  3. 3. COST REDUCTION TECHNOLOGI ES Automation, robotics SUPPLY (Technology, outsourcing) DEMAND (populationgrowth, marketing,net exports)
  4. 4. COST REDUCTION TECHNOLOGI ES ICT, Internet SUPPLY (Technology, outsourcing) DEMAND (populationgrowth, marketing,net exports)
  5. 5. COST REDUCTION TECHNOLOGI ES ICT, Internet Automation, robotics SUPPLY (Technology, outsourcing) EXISTING INDUSTRIES DEMAND (populationgrowth, marketing,net exports)
  6. 6. COST REDUCTION TECHNOLOGI ES Delayed substitutes (slow decline) Adjustment - ICT, Internet Automation, robotics IT and high skill jobs SUPPLY (Technology, outsourcing) EXISTING INDUSTRIES NEW INDUSTRIES DEMAND (populationgrowth, marketing,net exports)
  7. 7. COST REDUCTION TECHNOLOGI ES ICT, Internet Automation, robotics SUPPLY (Technology, outsourcing) NEW INDUSTRIES DEMAND (populationgrowth, marketing,net exports)
  8. 8. IT and high skill jobs SUPPLY (Technology, outsourcing) NEW INDUSTRIES DEMAND (populationgrowth, marketing,net exports)
  9. 9. COST REDUCTION TECHNOLOGI ES Instant substitutes (rapid decline) ICT, Internet Automation, robotics SUPPLY (Technology, outsourcing) EXISTING INDUSTRIES DEMAND (populationgrowth, marketing,net exports)
  10. 10. COST REDUCTION TECHNOLOGI ES Delayed substitutes (slow decline) Instant substitutes (rapid decline) Adjustment Unemployment/ Underemployment- ICT, Internet Automation, robotics IT and high skill jobs SUPPLY (Technology, outsourcing) EXISTING INDUSTRIES NEW INDUSTRIES DEMAND (populationgrowth, marketing,net exports) Human behavior Government policies (education/trainin g, income distribution),
  11. 11. ROLE OF GOVERNMENT History of technological advance  overall employment  But this time could be different (middle skills, extent of disruption)  Income distribution  Winner take all markets (Frank and Cook, 2010)  Compensation divergent from apparent value of the product of labor  Minor differences in skill and algorithms  Acceleration of a trend in stagnation and decline of low and middle incomes  Technological advance benefits society as a whole but the disruption often hurts individuals  Potential for decline of mass markets (Ford, 2009)  Freelancing brings inconsistent income
  12. 12. ROLE OF GOVERNMENT  Solutions?  Retraining/education insufficient  Side payments: redistribution of wealth  Just: small differences in winner take all markets  Necessary: decline of mass markets could collapse economy hurting the rich also  Transforming the welfare state  Basic subsistence income  Replace the patchwork of means tested programs (and related bureaucracy)  Avoid perverse incentives and graduation problems (100%+ effective tax rates)  Reduces risk of entrepreneurial activity/freelancing  Need for experimentation  Job sharing  Minimum wage  Ownership stake
  13. 13. CONCLUSIONS Globalization is exerting competitive pressure to:  Introduce cost savings technologies  Introduce new technologies for differentiation purposes Supply factors are putting downward pressure on employment  Some technologies provide time for adaptation  Some technologies have an instantaneous effect on employment Industries are generating STEM related jobs but the number of STEM jobs is most likely insufficient to absorb layoffs Government policies will need to be put in place for address the short term and possible long term negative effects

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