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Economic Policies since the Global Financial Crisis pp 173–220Cite as

Palgrave Macmillan

Investment, Unemployment and the Cyber Revolution

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Part of the book series: International Papers in Political Economy ((IPPE))

Abstract

Internet and mobile technologies have brought many benefits, including productivity rises, more effective co-ordination of economic and financial activities, and new market opportunities. However, negative impacts are often ignored. Labour productivity, wages and life satisfaction may decline if workers struggle with, or are replaced by, new technologies. Online social networks, easily accessible via mobile technologies, create opportunities for distractions and shirking at work. Automation of an increasing range of jobs dampens labour demand and accelerates substitution of capital for labour. This chapter explores one facet of potential implications, specifically the impacts on long-term unemployment, as a proxy for secular stagnation. Relationships between gross fixed capital formation, computing investment and long-term unemployment for 17 OECD (Organisation for Economic Co-operation and Development) countries over the period 2000–2010 are analysed using panel estimation techniques. The findings suggest that increases in computing investment are associated with rises in long-term unemployment. The chapter concludes with an analysis of policy implications and potential solutions.

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Notes

  1. 1.

    Details were publicised in the news, e.g. see https://www.theguardian.com/technology/2005/may/16/media.business

  2. 2.

    Source: US Bureau of Economic Analysis, Contributions to Real GDP for Final Sales of Computers, Software, and Communications Equipment, Prices and Output for Information and Communication Technologies, US Department of Commerce. Available at: www.bea.gov/iTable/iTable.cfm?reqid=12&step=3&isuri=1&1203=2079#reqid=12&step=3&isuri=1&1203=2079. Available at: www.bea.gov/iTable/iTable.cfm?reqid=12&step=3&isuri=1&1203=2079#reqid=12&step=3&isuri=1&1203=2079.

  3. 3.

    Chamley (2003) provides an overview of Bayes’s rational herding models.

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Author information

Authors and Affiliations

  1. Institute for Choice, University of South Australia, 13th Floor, 140 Arthur Street, North Sydney, NSW, Australia

    Michelle Baddeley

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  1. Michelle Baddeley
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Editor information

Editors and Affiliations

  1. University of Cambridge, Cambridge, United Kingdom

    Philip Arestis

  2. University of Leeds, Leeds, United Kingdom

    Malcolm Sawyer

Appendix

Appendix

Data sources (2000–2010), 17 countries: Australia, Austria, Canada, Denmark, Finland, France , Germany , Ireland, Italy, Japan, the Netherlands, New Zealand, Spain , Sweden , Switzerland, the UK and the USA .

All data downloaded from the OECD database:

Long-term unemployment

Unemployment of 6 months or more, as a proportion of total unemployment .

Calculated from OECD labour market data on unemployment duration.

Source: OECD database.

https://data.oecd.org/unemp/long-term-unemployment -rate.htm

ICT investment

Measured as a proportion of total investment .

Source: OECD database

https://data.oecd.org/ict/ict-investment .htm

Gross fixed capital formation

Gross fixed capital formation (GFCF) measured as growth rate.

Source: OECD database, Investment (GFCF)

https://data.oecd.org/gdp/investment-gfcf.htm (indicator). doi: 10.1787/b6793677-en

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Baddeley, M. (2017). Investment, Unemployment and the Cyber Revolution. In: Arestis, P., Sawyer, M. (eds) Economic Policies since the Global Financial Crisis. International Papers in Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-60459-6_5

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  • DOI: https://doi.org/10.1007/978-3-319-60459-6_5

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