Entrada Blog

Today we publish the content of a technology article published by Julián Messina (IDB) where we analyze the original article by David Autor and Anna salomons «is automation displacing workers?»

https://blogs.iadb.org/Ideasquecuentan/2018/10/03/podran-realmente-danar-el-empleo-los-robots/

In sci-fi movies, artificial intelligence and robots are the villains of the film, since they will replace us and become obsolete to As they impose on us their mechanical will. Advances in artificial intelligence and the increasing capacities and adaptability of robots are in fact radically changing society: algorithms that detect skin cancer better than radiologists; Robots carrying out operations without surgeons; Computers that fly airplanes. Seen as a whole, it seems that the end of employment is near.

Although less apocalyptic, economists are also sounding alarms. In one study, economist Carl Benedikt Frey and machine learning expert Michael Osborne analyze more than 700 occupations in the United States. According to them, almost 50% of these occupations, including taxi drivers, accountants, paralegal professions and credit agents could be replaced by robots in the next decade or two. For policymakers, fears of what can be done by rapid technological advances in the labour market are important. Argentina, for example, declared the future of employment as one of its three main problems to study during its G20 presidency this year.

Exaggerated fears

Still, there are many reasons to believe that these fears are exaggerated. Automation may remove entire categories of work. But, as David Autor and Anna Salomons suggest in a recent article, they are likely to create indirect effects that increase jobs in other sectors and drive general demand, generating employment growth throughout the economy. The greatest concern perhaps should be elsewhere, namely in the growing concentration of income in the hands of the owners of robots, which are enriched, to the detriment of workers. Let’s analyse the results of the study by David Autor and Anna salomons.

First of all, the good news. The increasing productivity of robots seems to have increased rather than diminished employment. To understand why, imagine that you work in a laboratory that manufactures prostheses, such as dentures, implants and crowns-which dentists use to replace missing teeth or tooth parts. The production of these devices uses machines, but also the skills of a technician, you, who calibrate them. And, one day, your employer acquires 3d printers. From that day on, his office no longer needs a mold to create the prosthesis. The data vectors sent by the dentist to 3d printers are sufficient, and their skills as a technician are no longer required.

That is the direct effect of technological change, and it may be very damaging to you. However, as the study suggests, there are at least three indirect channels by which this increase in productivity will boost employment in other sectors. First, new technologies can generate employment opportunities and better salaries in sectors that use as inputs products produced by robots. The introduction of 3d printers, to follow with my example, will reduce the costs of prostheses, increase demand for them, and generate more jobs for dentists.

Second, the increased demand for prostheses may increase the need for other products in previous phases of the production chain. For example, if the prostheses are made of ceramics, ceramic producers will benefit. In other words, technological improvements in a sector can encourage employment in sectors that produce the inputs needed for production in the first. Finally, the new technology will drive the general demand. Going back to my example, if the cost of prostheses decreases significantly due to 3d printers, I may not only be able to pay for my three implants, but maybe I can also take those expensive vacations in Rio de Janeiro.

Author and Salomons describe these indirect effects meticulously. They analyse 28 industries in 19 OECD countries between 1970 and 2007 and conclude that, although employment has declined by 8.2% in industries affected by technological advances, indirect effects have generated total employment increases of 17.8%. Of course, the past is an imperfect predictor of the future, but these results, as I mentioned, seem to be relatively good news.

Technological change enriches the rich more 

The perhaps most worrisome aspect of the study is the result that shows that these improvements in productivity have resulted in a decrease in the participation of work in the income. Historically, the work took about two thirds of the total income generated in the economy, leaving the remaining third part for capital, but since the years 80 this participation has been declining in most of the developed countries and Development. Author and salomons calculate that six percentage points of this fall are due to automation. In other words, the work has an increasingly small part of the production, a smaller part of the cake. Meanwhile, the owners of capital, the rich, are getting richer and becoming more powerful.

Author and Salomons do not examine the inequality between workers, although the author himself has worked very hard in recent years in analyzing the direct effects of technology on the distribution of salaries. These analyses also show that technological changes in recent decades have been instrumental in explaining the increasing wage inequality in developed countries. On what is happening with the technological change and the distribution of salaries in Latin America we know less. A recent and innovative initiative of the IDB is just trying to understand these aspects, and more generally to analyze the different angles of the future of employment.

Robots and economic Equity

In the meantime, what can be done? Some have suggested a technology tax to slow advances in the use of robotics. This seems to me to be harmful to productivity and only delays the inevitable. But it does not mean that measures should not be taken on the distribution side to increase equity. For example, inheritance taxes could slow the accumulation of wealth among the families that own capital, so that we are not permanently empowering an oligarchy. Income from these taxes could serve to increase the social protection network and help with better job training and other compensations to those who are harmed by technological change. Moreover, just when society has come to accept education as an inherent right, we could also think of securing a certain level of minimum wealth to match the playing conditions. Whether we like it or not, artificial intelligence and robots are the future. The challenge for society is how to learn to take advantage of productivity gains for our benefit and ensure a satisfactory and fair life for all.