Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share. Brookings Institution. David Autor and Anna Salomons. March 8, 2018

 Is automation a labor-displacing force? This possibility is both an age-old concern and at the heart of a new theoretical literature considering how labor immiseration may result from a wave of “brilliant machines,” which is in part motivated by declining labor shares in many developed countries. Comprehensive evidence on this labor-displacing channel is at present limited. Harnessing a model from Acemoglu and Restrepo (2018), the authors first outline the various channels through which automation impacts labor’s share of output. They then turn to empirically estimating the employment and labor share impacts of productivity growth—an omnibus measure of technological change—using data on 28 industries for 18 OECD countries since 1970. Their main findings are that although automation has not been employment-displacing, it has reduced labor’s share in value added. They disentangle the channels through which these impacts come about by considering both the effects occurring within the advancing industry and spillovers onto the industry’s suppliers and customers, and by separately estimating the wage, output, and price responses to automation. Their estimates highlight that the labor share-displacing effects of productivity growth, which were absent in the 1970s, have become more pronounced over time, largely because of a weakening wage response. This finding is consistent with automation having become less labor-augmenting over time. [Note: contains copyrighted material].

 [PDF format, 75 pages].

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Social Media and the Workplace

Social Media and the Workplace. Pew Research Center. Kenneth Olmstead et al. June 22, 2016.

Social media influences and permeates many aspects of daily life for Americans today, and the workforce is no exception. These digital platforms offer the potential to enhance worker productivity by fostering connections with colleagues and resources around the globe. At the same time, employers might worry that employees are using these tools for non-work purposes while on the job or engaging in speech in public venues that might reflect poorly on their organization. [Note: contains copyrighted material].

[PDF format, 15 pages, 611.92 KB].

Age, Ageing and Skills: Results from the Survey of Adult Skills

Age, Ageing and Skills: Results from the Survey of Adult Skills. Organisation for Economic Co-operation and Development. Marco Paccagnella. April 22, 2016.

The paper presents a comprehensive analysis of the link between age and proficiency in information-processing skills, based on information drawn from the Survey of Adult Skills (PIAAC). The data reveal significant age-related differences in proficiencies, strongly suggesting that proficiency tends to “naturally” decline with age. Age differences in proficiency are, at first sight, substantial. On average across the OECD countries participating in PIAAC, adults aged 55 to 65 score some 30 points less than adults aged 25 to 34 on the PIAAC literacy scale, which is only slightly smaller than the score point difference between tertiary educated and less-than-upper-secondary educated individuals. However, despite their lower levels of proficiency, older individuals do not seem to suffer in terms of labor market outcomes. [Note: contains copyrighted material].

[PDF format, 75 pages, 2.35 MB].

Equal Pay and Opportunity

Equal Pay and Opportunity. Equal Opportunity Institute. Marilyn Watkins and Sam Hatzenbeler. April 12, 2016.

From high-profile CEOs and movie stars to healthcare and retail workers, men consistently make more than women. Social scientists and economists have found clear evidence that gender-based discrimination persists – and is so deeply ingrained in culture and practice that it often goes unrecognized. Ensuring that all employees have the right to discuss and ask about pay and job opportunities, and that anti-discrimination laws are effectively enforced, will benefit women, families, businesses, and our state economy. [Note: contains copyrighted material].

[PDF format, 4 pages, 582.4 KB].

Should Tipping Be Abolished?

Should Tipping Be Abolished? National Center for Policy Analysis. Richard McKenzie. March 26, 2016.

The practice of tipping restaurant servers and bartenders is under attack. Some academics and pundits want to abolish tipping and replace the practice with a higher minimum hourly wage or a so-called “living wage,” generally described as the wage rate required to lift the living standards of a household or family with only one worker above the poverty line. [Note: contains copyrighted material].

[PDF format, 12 pages, 839.84 KB].

Happy Birthday, You’re Fired! The Effects of Age-Dependent Minimum Wages on Youth Employment Flows in the Netherlands

Happy Birthday, You’re Fired! The Effects of Age-Dependent Minimum Wages on Youth Employment Flows in the Netherlands. Cato Institute. Jan Kabatek. March 30, 2016.

Many countries use age-dependent minimum wage systems to facilitate the entry of young workers into the labor force. The age dependency turns the minimum wage rate into a stepwise increasing function of workers’ calendar age, rendering young workers comparatively cheaper than older workers. Being subject to the reduced minimum wage, younger job seekers become more desirable for firms and therefore are more likely to find a job that fits their skills and experience. Indeed, several studies find positive effects of an age-dependent minimum wage on youth employment. However, what they fail to address is that, apart from its effects on employment stocks, this policy design changes the youth labor market flows, introducing new dynamics into the decisions of both employers and employees. [Note: contains copyrighted material].

[PDF format, 2 pages, 69.63 KB].

Public Predictions for the Future of Workforce Automation

Public Predictions for the Future of Workforce Automation. Pew Research Center. Aaron Smith. March 10, 2016.

From self-driving vehicles and semi-autonomous robots to intelligent algorithms and predictive analytic tools, machines are increasingly capable of performing a wide range of jobs that have long been human domains. A 2013 study by researchers at Oxford University posited that as many as 47% of all jobs in the United States are at risk of “computerization.” And many respondents in a recent Pew Research Center canvassing of technology experts predicted that advances in robotics and computing applications will result in a net displacement of jobs over the coming decades – with potentially profound implications for both workers and society as a whole. [Note: contains copyrighted material].

[PDF format, 12 pages, 602.7 KB].