Which occupations are affected by software, robots and AI
Michael Webb develops a new method to predict the impacts of any technology on occupations. He finds that:
- Individuals with less than high school education, and in low-wage
occupations, are most exposed to robots. Men under age 30 are most exposed, consistent with robots’ substituting for what might be termed “muscle” tasks;
- Individuals in middle-wage occupations are most exposed to software. This is consistent with the literature on polarization, which has found that I.T. has reduced demand for middle-wage jobs while increasing it for low- and high-wage jobs;
- Individuals in high-skill occupations are most exposed to AI i.e. individuals with college degrees, including Master’s degrees, with accumulated experience and older.
He concludes:
I find that AI is projected to reduce inequality measured as the ratio of the 90th to the 10th percentile of wages. On the other hand, it is projected to increase inequality at the top of the distribution, measured as the ratio of the 99th to the 90th percentile.
The Impact of Artificial Intelligence on the Labor Market
Author: Michael Webb
From: Stanford University
Which public policies to alleviate the adverse effects of technology on workers
Jaimovich develop a quantitative, heterogeneous agent, general equilibrium model of labor force participation, occupational choice, and capital investment to study the aggregate and distributional effects of advances in automation. They use this model to evaluate retraining programs and three transfer policies – Unemployment insurance (UI), universal basic income (UBI) and increased transfers to those out of the labor force. They find that:
- Retraining programs for workers who are outside the labor force benefit both the unskilled and the high-skilled. The latter benefit via lower labor taxes and higher wages. As long as the amount per participant is less than 30% of GDP per capita, retraining programs, from an aggregate perspective have a positive return;
- Generous UI increases both labor force participation and unemployment. Overall these effects tend to cancel each other resulting in a zero effect on the economy without major changes in welfare ;
- The UBI program and the increased transfers to those out of the labor force lead to a fall in labor force participation, a fall in GDP, a big jump in distortionary taxation, and act mainly as redistributive programs from people working in non-routine cognitive occupations to the unskilled.
A Tale of Two Workers: The Macroeconomics of Automation
Authors: Nir Jaimovich, Itay Saporta-Eksten, Henry Siu, Yaniv Yedid-Levi
From: University of Zurich, Tel Aviv University, University of British Columbia, Interdisciplinary Center, Herzliya
