Introduction
Technology
Trade
Conclusions

The Labor Market Effects of Technology and Trade
Shocks in the United States
Pro...
Introduction
Technology
Trade
Conclusions

Technology and Trade
Key forces shaping labor markets in industrialized nations...
Introduction
Technology
Trade
Conclusions

Outline
1

Technology
Future: What are economists’ long-term predictions about
...
Introduction
Technology
Trade
Conclusions

Hypothesis 1: The End of Work?

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

Hypothesis 1: The End of Work?

Source: Time Magazine
Dorn

Technology and Trad...
Introduction
Technology
Trade
Conclusions

Hypothesis 2: The End of Technological Change?

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

Hypothesis 2: The End of Technological Change?

Source: Gordon (2012)
Dorn

Tec...
Introduction
Technology
Trade
Conclusions

Hypothesis 2: The End of Technological Change?

Source: Gordon (2012)
Dorn

Tec...
Introduction
Technology
Trade
Conclusions

A Clash of Predictions

Speculative predictions about future technological chan...
Introduction
Technology
Trade
Conclusions

From Speculation to Evidence

We can only speculate about the distant future. H...
Introduction
Technology
Trade
Conclusions

Technology 1: Hand Spindle

Source: Wikipedia
Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

Technology 2: Spinning Wheel (11th-15th Century)

Source: Wikipedia
Dorn

Techn...
Introduction
Technology
Trade
Conclusions

Reaction to the Spinning Wheel: Bans

In 1412, the city council of Cologne proh...
Introduction
Technology
Trade
Conclusions

Technology 3: Spinning Machine (18th Century)

Source: AP European History

Dor...
Introduction
Technology
Trade
Conclusions

Reaction to the Spinning Machine: Protests

Source: Wikipedia
Dorn

Technology ...
Introduction
Technology
Trade
Conclusions

Labor Market Impact of Technological Innovation
The spinning machine allowed th...
Introduction
Technology
Trade
Conclusions

The Luddite Fallacy

Predictions of technology-induced long-term unemployment
h...
Introduction
Technology
Trade
Conclusions

The Computer Revolution

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

What Do Computers Do?
Computers execute routines that follow exact procedural r...
Introduction
Technology
Trade
Conclusions

“Routine” Occupations Compete with Computers

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

“Abstract” Occupations Benefit from Computers

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

“Manual” Occupations are not Directly Affected

Dorn

Technology and Trade
Introduction
Technology
Trade
Conclusions

“Routine” Occupations Have Middling Wages

Source: Autor and Dorn (2013)
Dorn

...
Introduction
Technology
Trade
Conclusions

Labor Market Polarization: USA 1980-2005

Source: Autor and Dorn (2013)

Dorn

...
Introduction
Technology
Trade
Conclusions

Labor Market Polarization: Europe 1993-2006

Source: Goos, Manning and Salomons...
Introduction
Technology
Trade
Conclusions

Technology vs Trade
Trade between wealthy countries and less developed countrie...
Introduction
Technology
Trade
Conclusions

US Trade with China
Trade&Flows&Between&U.S.&and&&China&
(Billions&of&2007&US&D...
Introduction
Technology
Trade
Conclusions

Other Countries’ Trade with China

Dorn

Source: Autor, Dorn and Hanson (2013)
...
Introduction
Technology
Trade
Conclusions

Measuring the Impacts of Trade and Technology
Autor, Dorn and Hanson (2013) sho...
Introduction
Technology
Trade
Conclusions

Geography of Technology Exposure

Autor, Dorn and Hanson (2013)

Dorn

Technolo...
Introduction
Technology
Trade
Conclusions

Geography of Trade Exposure

Autor, Dorn and Hanson (2013)

Dorn

Technology an...
Introduction
Technology
Trade
Conclusions

Trade and Technology Impacts in Manufacturing

Source: Autor, Dorn and Hanson (...
Introduction
Technology
Trade
Conclusions

Trade and Technology Impacts in Non-Manufacturing

Source: Autor, Dorn and Hans...
Introduction
Technology
Trade
Conclusions

What Do We Learn from the Evidence?
1

A long history shows that technological ...
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Innlegg av Prof David Dorn på NHHs høstkonferanse 29oct

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Great Speech, great topic, big dilemma for diferent working groups in the US, and Norway.

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Innlegg av Prof David Dorn på NHHs høstkonferanse 29oct

  1. 1. Introduction Technology Trade Conclusions The Labor Market Effects of Technology and Trade Shocks in the United States Prof. Dr. David Dorn CEMFI Madrid October 2013 Dorn Technology and Trade
  2. 2. Introduction Technology Trade Conclusions Technology and Trade Key forces shaping labor markets in industrialized nations? Universal hypothesis: “Technology and Trade” Dorn Technology and Trade
  3. 3. Introduction Technology Trade Conclusions Outline 1 Technology Future: What are economists’ long-term predictions about technological change? Past: How did technology affect workers over the course of history? Present: What do we know about the labor market impacts of the ongoing “computer revolution”? 2 Trade How does its impact differ from that of technology? 3 Conclusions Dorn Technology and Trade
  4. 4. Introduction Technology Trade Conclusions Hypothesis 1: The End of Work? Dorn Technology and Trade
  5. 5. Introduction Technology Trade Conclusions Hypothesis 1: The End of Work? Source: Time Magazine Dorn Technology and Trade
  6. 6. Introduction Technology Trade Conclusions Hypothesis 2: The End of Technological Change? Dorn Technology and Trade
  7. 7. Introduction Technology Trade Conclusions Hypothesis 2: The End of Technological Change? Source: Gordon (2012) Dorn Technology and Trade
  8. 8. Introduction Technology Trade Conclusions Hypothesis 2: The End of Technological Change? Source: Gordon (2012) Dorn Technology and Trade
  9. 9. Introduction Technology Trade Conclusions A Clash of Predictions Speculative predictions about future technological change vary dramatically: 1 An ever accelerating improvement of computer technology will rapidly lead us to the point where computers dominate most human labor. 2 There is decreasing scope for future innovation, and technology will have little novel impact on labor markets in the future. Dorn Technology and Trade
  10. 10. Introduction Technology Trade Conclusions From Speculation to Evidence We can only speculate about the distant future. However, we have empirical evidence about past experience with technology: 1 What labor market effects of technology did people expect? 2 What were the actual impacts? I will discuss historical technological progress using examples from the textile sector. Dorn Technology and Trade
  11. 11. Introduction Technology Trade Conclusions Technology 1: Hand Spindle Source: Wikipedia Dorn Technology and Trade
  12. 12. Introduction Technology Trade Conclusions Technology 2: Spinning Wheel (11th-15th Century) Source: Wikipedia Dorn Technology and Trade
  13. 13. Introduction Technology Trade Conclusions Reaction to the Spinning Wheel: Bans In 1412, the city council of Cologne prohibited the production of a spinning wheel by a local craftsman, because it feared unemployment among textile manufacturers that used the hand spindle. In the 16th Century, the newly developed ribbon weaving machines were banned in large parts of Europe. Source: Prion (1907) Dorn Technology and Trade
  14. 14. Introduction Technology Trade Conclusions Technology 3: Spinning Machine (18th Century) Source: AP European History Dorn Technology and Trade
  15. 15. Introduction Technology Trade Conclusions Reaction to the Spinning Machine: Protests Source: Wikipedia Dorn Technology and Trade
  16. 16. Introduction Technology Trade Conclusions Labor Market Impact of Technological Innovation The spinning machine allowed that one worker produced the amount of yarn previously produced by 200 workers Nevertheless, technological progress did not induce a long-term rise in unemployment! Why? 1 Creation of new jobs in the “technology sector” (e.g., production of machines) 2 Falling price of textile allowed consumers to buy more textiles and other goods, thus creating job growth in many sectors of the economy Dorn Technology and Trade
  17. 17. Introduction Technology Trade Conclusions The Luddite Fallacy Predictions of technology-induced long-term unemployment have been proven wrong time and again. The amount and composition of work in the economy is not fixed: While there is ongoing mechanization of jobs, there is also ongoing creation of new employment opportunities. At the start of the 20th Century, few would have predicted that today, employment in banks or hospitals or in the entertainment industry exceeds employment of the entire agricultural sector. Dorn Technology and Trade
  18. 18. Introduction Technology Trade Conclusions The Computer Revolution Dorn Technology and Trade
  19. 19. Introduction Technology Trade Conclusions What Do Computers Do? Computers execute routines that follow exact procedural rules: Saving/recalling/transmitting information Calculations Steering machines according to a pre-specified program Computers struggle with task that cannot easily be programed ex ante: Creativity Social interaction (leadership, negotiations, coaching) Visual and spatial recognition and fine motoric movement Dorn Technology and Trade
  20. 20. Introduction Technology Trade Conclusions “Routine” Occupations Compete with Computers Dorn Technology and Trade
  21. 21. Introduction Technology Trade Conclusions “Abstract” Occupations Benefit from Computers Dorn Technology and Trade
  22. 22. Introduction Technology Trade Conclusions “Manual” Occupations are not Directly Affected Dorn Technology and Trade
  23. 23. Introduction Technology Trade Conclusions “Routine” Occupations Have Middling Wages Source: Autor and Dorn (2013) Dorn Technology and Trade
  24. 24. Introduction Technology Trade Conclusions Labor Market Polarization: USA 1980-2005 Source: Autor and Dorn (2013) Dorn Technology and Trade
  25. 25. Introduction Technology Trade Conclusions Labor Market Polarization: Europe 1993-2006 Source: Goos, Manning and Salomons (2012) Dorn Technology and Trade
  26. 26. Introduction Technology Trade Conclusions Technology vs Trade Trade between wealthy countries and less developed countries has increased dramatically in the last 20-25 years. Most of this trade growth is driven by China’s rise as a global manufacturing superpower: Reforms since the 1980s: Special Economic Zones, better access to foreign investment and technology, facilitated domestic migration Result: dramatic increase in productivity in certain manufacturing industries US is potentially most affected by China because it provides few exports to China Dorn Technology and Trade
  27. 27. Introduction Technology Trade Conclusions US Trade with China Trade&Flows&Between&U.S.&and&&China& (Billions&of&2007&US&Dollars)& 1991& 2000& 2007& $400&bil& $350&bil& $330.0&bil& $300&bil& $250&bil& $200&bil& $150&bil& $121.6&bil& $100&bil& $57.4&bil& $50&bil& $26.3&bil& $10.3&bil& $23.0&bil& $0&bil& Imports& Exports& Source: Autor, Dorn and Hanson (2013) Dorn Technology and Trade
  28. 28. Introduction Technology Trade Conclusions Other Countries’ Trade with China Dorn Source: Autor, Dorn and Hanson (2013) Technology and Trade
  29. 29. Introduction Technology Trade Conclusions Measuring the Impacts of Trade and Technology Autor, Dorn and Hanson (2013) show that exposure to trade and technology differs across geographic locations in the US: Some cities are historically specialized in activities that use a lot of “routine” occupations, and now face greater exposure to computer technology Others are specialized in manufacturing industries that have become strongly exposed to import competition from China We study the impact of technology and trade exposure on employment in manufacturing and non-manufacturing jobs employment in “abstract” (e.g., managerial/professional), “routine” (e.g., clerical/production) and “manual” (e.g., service/construction) occupations Dorn Technology and Trade
  30. 30. Introduction Technology Trade Conclusions Geography of Technology Exposure Autor, Dorn and Hanson (2013) Dorn Technology and Trade
  31. 31. Introduction Technology Trade Conclusions Geography of Trade Exposure Autor, Dorn and Hanson (2013) Dorn Technology and Trade
  32. 32. Introduction Technology Trade Conclusions Trade and Technology Impacts in Manufacturing Source: Autor, Dorn and Hanson (2013) Dorn Technology and Trade
  33. 33. Introduction Technology Trade Conclusions Trade and Technology Impacts in Non-Manufacturing Source: Autor, Dorn and Hanson (2013) Dorn Technology and Trade
  34. 34. Introduction Technology Trade Conclusions What Do We Learn from the Evidence? 1 A long history shows that technological change (and increased trade) does not inevitably create long-term unemployment. 2 However, these forces affect the composition of employment: polarization of employment due to displacement of “routine” middle-wage occupations decline of manufacturing employment due to trade competition 3 Not all displaced workers can easily reallocate to new and attractive jobs. 4 A proactive school and training system should foster the competences that are least threatened by computerization and trade, such as creativity, problem solving, and communication. Dorn Technology and Trade

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