Advertisement

Robots, Structural Change, and Employment: Future Scenarios

  • Ben Vermeulen
  • Andreas PykaEmail author
  • Pier Paolo Saviotti
Living reference work entry
  • 23 Downloads

Abstract

A parsimonious multisectoral, multioccupational agent-based model is developed to study the impact of robotization on employment and wages. Hereby the effects of three policy interventions are studied: a universal basic income, a robot tax, and stimulating spawning of new sectors combined with increasing dynamic efficiency through labor mobility. It is found that robotization results in lower unit production costs and lower product prices, thus softens wage competition across sectors, and thereby causes stagnation of wages and possibly an income gap between low- and high-skilled occupations. However, the emergence of new sectors results in (sectoral) labor shortages and thus induces price-wage spirals effectively breaking away from wage stagnation and inducing “vacancy chains” in which workers migrate to more advanced occupations/sectors. Given these different effects of robotization, policy interventions are to be differentiated between economies with labor surplus and labor scarcity. In case of labor surplus, robotization will exacerbate unemployment and cause wage stagnation, such that it is commendable to tax robots to prevent robotization, a universal basic income to stimulate product and labor demand, and to stimulate innovation to create new sectors mopping up the unemployed. Under labor scarcity, wages are high and further escalate, which (i) invites technological substitution and (ii) slows down sector emergence, both reducing wage competition and labor utilization. In this case, robotization “frees up” labor, resolves labor shortages, reduces vacancies in new sectors, and relieves firms from (fierce) wage competition. In this case, a universal basic income exacerbates labor shortages, robot tax sustains fierce wage competition, and new sectors increase labor demand, such that these interventions are discommended. While there are indications of a basin of attraction for Schumpeterian creative-destruction at high employment levels, policy interventions may well be required to increase the dynamic efficiency of returning to those levels of employment through structural change and enhanced labor mobility.

References

  1. Abbott R, Bogenschneider B (2018) Should robots pay taxes: tax policy in the age of automation. Harv Law Policy Rev 12:145–175Google Scholar
  2. Acemoglu D, Restrepo P (2016) The race between machine and man: implications of technology for growth, factor shares and employment. NBER working paper, 22252. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  3. Acemoglu D, Restrepo P (2017) Robots and jobs: evidence from US Labor Markets. NBER working paper, 23285. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  4. Acemoglu D, Restrepo P (2018) Artificial Intelligence, automation and work. NBER working paper 24196, Cambridge, MAGoogle Scholar
  5. Anderson CA, Brown JC, Bowman MJ (1952) Intelligence and occupational mobility. J Polit Econ 60(3):218–239CrossRefGoogle Scholar
  6. Autor D, Salomons AM (2018) Is automation labor-displacing? Productivity growth, employment, and the labor share. Brookings Papers on Economic Activity, Cambridge, MAGoogle Scholar
  7. Autor DH, Levy F, Murnane RJ (2003) The skill content of recent technological change: an empirical exploration. Q J Econ 118(4):1279–1333CrossRefGoogle Scholar
  8. Autor DH, Katz LF, Kearney MS (2006) The polarization of the US Labor Market. NBER working paper 11986, Cambridge, MAGoogle Scholar
  9. Baumol WJ (1967) Macroeconomics of unbalanced growth: the anatomy of urban crisis. Am Econ Rev 57(3):415–426Google Scholar
  10. Blanchard OJ (1986) The wage price spiral. Q J Econ 101(3):543–565CrossRefGoogle Scholar
  11. Blumen I, Kogan M, McCarthy PJ (1955) The industrial mobility of labor as a probability process. Cornell studies of industrial and labor relations. Cornell University Press, IthacaGoogle Scholar
  12. Brynjolfsson E, McAfee A (2011) Race against the machine: how the digital revolution is accelerating innovation, driving productivity, and irreversibly transforming employment and the economy. Lexington, Digital Frontier PressGoogle Scholar
  13. Cardullo G, Guerci E (2018) Interpreting the Beveridge curve. An agent-based approach. J Econ Behav Organ 157:84–100Google Scholar
  14. Clark CMA, Kavanagh C (1996) Basic income, inequality, and unemployment: rethinking the linkage between work and welfare. J Econ Issues 30(2):399–406CrossRefGoogle Scholar
  15. Colombino U (2015) Is unconditional basic income a viable alternative to other social welfare measures? IZA world of labor, 128. Institute for the Study of Labor, BonnGoogle Scholar
  16. Dawid H, Gemkow S, Harting P, Kabus K, Neugart M, Wersching K (2008) Skills, innovation, and growth: an agent-based policy analysis. J Econ Stat 228:251–275Google Scholar
  17. de Wispelaere J, Stirton L (2012) A disarmingly simple idea? Practical bottlenecks in the implementation of a universal basic income. Int Soc Secur Rev 65(2):103–121CrossRefGoogle Scholar
  18. Deming DJ (2015) The growing importance of social skills in the labor market. NBER working paper, 21473. National Bureau Economic Research, Cambridge, MAGoogle Scholar
  19. Dosi G, Fagiolo G, Roventini A (2010) Schumpeter meeting Keynes: a policy-friendly model of endogenous growth and business cycles. J Econ Dyn Control 34(9):1748–1767CrossRefGoogle Scholar
  20. Dosi G, Pereira MC, Roventini A, Virgillito ME (2018) The effects of labour market reforms upon unemployment and income inequalities: an agent-based model. Soc Econ Rev 16(4):687–720CrossRefGoogle Scholar
  21. Ebersberger B, Pyka A (2002) Innovation and sectoral employment: a trade–off between compensation mechanisms. Labour 16(4):635–665CrossRefGoogle Scholar
  22. Echevarria C (1997) Changes in sectoral composition associated with economic growth. Int Econ Rev 38(2):431–452CrossRefGoogle Scholar
  23. European Commission (2007) Towards common principles of flexicurity. More and better jobs through flexibility and security. COM(2007) 359, BrusselsGoogle Scholar
  24. Fagiolo G, Dosi G, Gabriele R (2004) Matching, bargaining, and wage setting in an evolutionary model of labor market and output dynamics. Adv Complex Syst 7(2):157–186CrossRefGoogle Scholar
  25. Ford M (2015) The rise of the robots: technology and the threat of mass unemployment. One world Publications, LondonGoogle Scholar
  26. Forge S, Blackman C, Bogdanowicz M, Desruelle P (2010) A Helping Hand for Europe: the Competitive Outlook for the EU Robotics Industry, EUR, 24600 EN. Publications Office, LuxembourgGoogle Scholar
  27. Frey CB, Osborne M (2017) The future of employment: how susceptible are jobs to computerisation? Technol Forecast Soc Chang 114:254–280CrossRefGoogle Scholar
  28. Gasteiger E, Prettner K (2017) A note on automation, stagnation, and the implications of a robot tax. Diskussionsbeiträge No. 2017/17. Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft, BerlinGoogle Scholar
  29. Goos M, Manning A (2007) Lousy and lovely jobs: the rising polarization of work in Britain. Rev Econ Stat 89(1):118–133CrossRefGoogle Scholar
  30. Goos M, Manning A, Salomons A (2009) Job polarization in Europe. Am Econ Rev 99(2):58–63CrossRefGoogle Scholar
  31. Graetz G, Michaels G (2015) Robots at work. Centre for Economic Performance discussion papers 1335. London School of Economics and Political Science, LondonGoogle Scholar
  32. Gregory T, Salomons A, Zierahn U (2016) Racing with or against the machine? Evidence from Europe. ZEW discussion paper no. 16-053; ZEW: Mannheim, Germany, https://www.zew.de/en/publikationen/racing-with-or-against-the-machine-evidence-from-europe/
  33. Groot LFM, Peeters HMM (1997) A model of conditional and unconditional social security in an efficiency wage economy: the economic sustainability of a basic income. J Post Keynes Econ 19(4):573–597CrossRefGoogle Scholar
  34. Jones D, Marinescu I (2018) The labor market impacts of universal and permanent cash transfers: evidence from the Alaska Permanent Fund. NBER working paper, 24312. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  35. Jovanovic B, Moffitt R (1990) An estimate of a sectoral model of labor mobility. J Polit Econ 98(4):827–852CrossRefGoogle Scholar
  36. Katz LF, Margo RA (2013) Technical change and the relative demand for skilled labor: the United States in historical perspective. NBER working paper, 18752. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  37. Keynes JM (1930) A treatise on money: the applied theory of money. AMS Press: New York, NY, USAGoogle Scholar
  38. Leontief W (1983) Technological advance, economic growth, and the distribution of income. Popul Dev Rev 9(3):403–410CrossRefGoogle Scholar
  39. Levin-Waldman OM (2018) The inevitability of a universal basic income. Challenge 61(2):133–155CrossRefGoogle Scholar
  40. Metcalfe JS, Foster J, Ramlogan R (2005) Adaptive economic growth. Camb J Econ 30:7–32CrossRefGoogle Scholar
  41. Mincer J, Jovanovic B (1979) Labor mobility and wages. NBER working paper, 357. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  42. Mokyr J, Vickers C, Ziebarth NL (2015) The history of technological anxiety and the future of economic growth: is this time different? J Econ Perspect 29(3):31–50CrossRefGoogle Scholar
  43. Mortensen DT, Pissarides CA (1999) Unemployment response to ‘skill-biased’ technology shocks: the role of labour market policy. Econ J 109:242–264CrossRefGoogle Scholar
  44. Neugart M (2004) Endogenous matching functions: an agent-based computational approach. Adv Complex Syst 7(2):187–201CrossRefGoogle Scholar
  45. Neugart M, Richiardi M (2018) Agent-based models of the labor market. In: Chen S, Kaboudan M, Du Y (eds) The Oxford handbook of computational economics and finance. Oxford University Press, New YorkGoogle Scholar
  46. Ngai LR, Pissarides CA (2007) Structural change in a multisector model of growth. Am Econ Rev 97(1):429–443CrossRefGoogle Scholar
  47. Pasinetti L (1981) Structural change and economic growth: a theoretical essay on the dynamics of the wealth of nations. Cambridge University Press, CambridgeGoogle Scholar
  48. Poder K, Veski A (2018) Zero-intelligence agents looking for a job. J Econ Interac Coord 13(3):615–640CrossRefGoogle Scholar
  49. Prodhan G (2017) European parliament calls for robot law, rejects robot tax. http://www.reuters.com/article/us-europe-robots-lawmaking-idUSKBN15V2KM. Accessed 2 Jan 2019
  50. Robinson C (2010) Occupational mobility, occupation distance and basic skills: evidence from job-based skill measures. Working paper of the university of Western OntarioGoogle Scholar
  51. Sanders C (2012) Skill uncertainty, skill accumulation, and occupational choice. Working paper 633. Washington University, St. LouisGoogle Scholar
  52. Saviotti PP (2001) Variety, growth and demand. J Evol Econ 11:119–142CrossRefGoogle Scholar
  53. Saviotti PP, Pyka A (2004a) Economic development, qualitative change and employment creation. Struct Chang Econ Dyn 15(3):265–287CrossRefGoogle Scholar
  54. Saviotti PP, Pyka A (2004b) Economic development by the creation of new sectors. J Evol Econ 14(1):1–35CrossRefGoogle Scholar
  55. Saviotti PP, Pyka A (2008) Product variety, competition and economic growth. J Evol Econ 18:323–347CrossRefGoogle Scholar
  56. Schumpeter JA (1942) Capitalism, socialism and democracy. Harper & Row, New YorkGoogle Scholar
  57. Saviotti PP, Pyka A (2013) The co-evolution of innovation, demand and growth. Econ Innov New Tech 22:461–482Google Scholar
  58. Spilerman S (1972) Extensions of the mover-stayer model. Am J Sociol 78(3):599–626CrossRefGoogle Scholar
  59. Standing G (2017) Basic income: and how we can make it happen. Pelican, LondonGoogle Scholar
  60. Stewart I, De D, Cole A (2015) Technology and people: the great job-creating machine. Deloitte, LondonGoogle Scholar
  61. van Parijs P (1995) Real freedom for all – what (if anything) can justify capitalism. Clarendon Press, OxfordGoogle Scholar
  62. van Parijs P (2018) Basic income and the left, a European debate. Social Europe, LondonGoogle Scholar
  63. van Parijs P, Vanderborght Y (2017) Basic income. A radical proposal for a free society and a sane economy. Harvard University Press, Cambridge, MACrossRefGoogle Scholar
  64. Vermeulen B, Kesselhut J, Pyka A, Saviotti PP (2018) The impact of automation on employment: just the usual structural change? Sustainability 10(5):1661CrossRefGoogle Scholar
  65. Vivarelli M (2007) Innovation and employment technological unemployment is not inevitable – some innovation creates jobs, and some job destruction can be avoided. IZA technical report. Forschungsinstitut zur Zukunft der Arbeit (IZA): Bonn, GermanyGoogle Scholar
  66. Vivarelli M (2014) Innovation, employment, and skills in advanced and developing countries: a survey of the economic literature. J Econ Issues 48(1):123–154CrossRefGoogle Scholar
  67. Weller C (2017) Bill Gates says robots that take your job should pay taxes. https://www.businessinsider.com/bill-gates-robots-pay-taxes-2017-2. Accessed 2 Jan 2019
  68. Wolfgang M (2016) The robotics market – figures and forecasts. RoboBusiness, Boston Consulting Group, BostonGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Ben Vermeulen
    • 1
  • Andreas Pyka
    • 1
    Email author
  • Pier Paolo Saviotti
    • 2
  1. 1.Institute of EconomicsUniversity of HohenheimStuttgartGermany
  2. 2.Faculty of GeosciencesUtrecht UniversityUtrechtThe Netherlands

Section editors and affiliations

  • Marco Vivarelli
    • 1
  1. 1.Department of Economic PolicyUniversità Cattolica del Sacro CuoreMilanoItaly

Personalised recommendations