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Symposium 2014

Proposal - The Future of Jobs

The Challenge

The time will come when technologies have completely substituted labor. No way, you say, and you are probably right: it will perhaps only be half of all labor. Indeed, a growing number of commentato ...

The time will come when technologies have completely substituted labor. No way, you say, and you are probably right: it will perhaps only be half of all labor. Indeed, a growing number of commentators think that technology is likely to have a more pronounced impact on employment than it has had in the past. While routine, codifiable tasks have already been largely automated, machines are becoming increasingly good at carrying out cognitive, formerly “human-only” tasks, such as language processing or driving. And the emergence of artificial intelligence and the digital interconnections between people will do much more; with unclear consequences for the labor market. Yet, automation is not the only reason for concern. Combine technologies with globalization and the jobs which cannot (yet) be automated will be offshored or taken over by an international superstar who can, aided be the internet, reach out to individuals anywhere on the planet.

Focus attention on improving skills among the most disadvantaged. This involves more school mobility and attracting better talent to teaching, especially in the US, largely by paying teachers better.

Nothing could be better than not having any jobs in the future. Leisure is good, work is what we do to buy the goods that complement leisure. If the economy can produce the same amount of output with much less labor, then all the better.

The concern should not be over high output-per-worker in the future. Increases in labor productivity are favorable to labor since there is a very strong connection between labor productivity and wages. The concern is over the distribution of the output to different members of society. If all workers were identical and work and its returns were shared equally among all society’s members, then we would welcome high productivity

This is a problem of structural mismatch. The jobs may be available in occupations or industries in which workers are absent. The notion of mismatch has been quantified and measured (Lazear and Spletzer (2012) is a recent study on the topic). Mismatch is a cyclic phenomenon, where some workers suffer more in downturns than others, but there are also long term aspects to mismatch. For example, there are chronic shortages of professional workers relative to their supply. The fact that the labor market creates relative shortages of some that do not seem to be remedied quickly is an issue of wage adjustment. Still, even with a perfectly flexible labor market, things could be improved both for the economy as a whole and for the adversely affected workers by providing the requisite skills.

What is the solution? Unfortunately, there is no magical answer and the one that is most appropriate is well-worn and perhaps a bit trite. But that does not make it less true. The problem, particularly in countries like the US, is that there is a large and perhaps growing group of individuals, in the US disadvantaged males, who have not gotten the skills necessary to compete in modern labor markets. The way to change that is to alter the school system that penalizes them and makes it difficult for them to succeed. This means reforming the schools, allowing more choice (even among public schools) and improving the professionalism of the teaching staff. Some (e.g., Peter Dolton) has found a strong relation between school quality and teacher pay. In the US, teachers are badly paid among college graduates and talented teachers are difficult to attract. One immediate step is to allow more student mobility and compensate teachers better, especially in the areas that need the most help, to attract and retain the best talent and serve those who are being left behind by technological advances in the labor market.