{"id":1195925,"date":"2023-04-17T10:35:50","date_gmt":"2023-04-17T08:35:50","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/?post_type=articles&p=1195925"},"modified":"2023-04-17T10:37:41","modified_gmt":"2023-04-17T08:37:41","slug":"on-the-unemployment-that-technology-may-generate","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/on-the-unemployment-that-technology-may-generate\/","title":{"rendered":"On the Unemployment That Technology May Generate"},"featured_media":1195927,"template":"","meta":{"_has_post_settings":[]},"schools":[],"areas":[461,26],"subjects":[522,422],"class_list":["post-1195925","articles","type-articles","status-publish","has-post-thumbnail","hentry","areas-labor-market","areas-technology","subjects-economics","subjects-innovation-and-technology"],"custom-fields":{"wpcf-article-leadin":["As the fourth industrial revolution brings fears of unemployment, what can history teach us about technology's impact on labor markets?"],"wpcf-article-body":["Jack Welch, the veteran former CEO of General Electric, once commented that you don\u2019t know if you have a great company until it\u2019s gone through a near-death experience. What is called the \u201cfourth industrial revolution\u201d is in full swing and its potential impact on the labor market reminds us of Welch\u2019s maxim. Once again, however, history comes to the rescue by furnishing us with helpful examples. Let\u2019s look at what \u201ctechnological unemployment\u201d is, what drives it, what lessons history can teach us, and then draw a conclusion.\r\n\r\nIn his 1930 essay \u201cEconomic Possibilities for our Grandchildren\u201d, Keynes introduced the concept of \u201ctechnological unemployment\u201d (although he didn\u2019t call it that). The British economist saw technological disruption as having the virtue of generating new jobs, the \u201cvice\u201d of destroying other jobs, and also the potential to boost productivity which would mean we worked less (he predicted a fifteen-hour working week, something he clearly got wrong). In his essay Keynes ventured that although in the medium term the creation of new jobs would offset the destruction of others, in between there might be some friction in which job destruction was temporarily higher than job creation and consequently some groups of workers would be hit by unemployment.\r\n\r\nWhen we look at the emergence of the fourth industrial revolution as technological disruption, there are several areas that once again raise the alarm bells that Keynes sounded. In particular, the impact of artificial intelligence, whether in its new formulation as generative AI, based on large language models, in its ChatGPT-style expressions or in its other variants involving task automation, the influence of robotization and the advent of autonomous vehicles (especially trucks) will have far-reaching consequences for the employment market.\r\n
Jobs will be destroyed gradually rather than suddenly.<\/blockquote>\r\nThis \u201calarm\u201d is not just a possibility \u2013 it is now a reality. For example, the United States shed six million manufacturing jobs between 2000 and 2020. Contrary to claims, the \u201cculprit\u201d has not been China\u2019s accession to the World Trade Organization (only one of the six million is associated with Chinese trade) but rather manufacturing process automation.\r\n\r\nAcademic studies unpacking the impact of automation, especially of the first factor (artificial intelligence), on the labor market try to break down the tasks in occupations so as to identify the ones which can be automated. We all perform tasks in our daily lives which could be automated. The fact that a task will be carried out by a machine in the future should not be a bad thing in itself. Tomorrow it will free up our time, time which we can spend on other, more creative pursuits. However, studies warn that occupations where more than half of their tasks could be automated are likely to die out. Albeit with significant differences in methods, they generally conclude that one in four jobs might \u201cdisappear.\u201d Often the headlines are \u201cscary.\u201d Nevertheless, jobs will be destroyed gradually rather than suddenly and new ones will also slowly but surely emerge, although this creative destruction also results in groups that will find it more difficult to match the new skills in demand.\r\n\r\nThe concern prompted by this state of affairs makes it important once again to draw on history. With the first industrial revolution came the Luddites, groups of workers who in response to the threat posed to craftsmanship by process mechanization turned to terrorism against factories. This was so widespread that in 1810 the British Parliament introduced the death penalty for attacks on production facilities and the government had to commit large numbers of Redcoats to counter the Luddites at a time when it was also fighting Napoleon in Spain. Yet in spite of the threat of factories, unemployment went back to normal. The advent of the tractor in the early 20th<\/sup> century triggered a similar scare in economies where farming accounted for almost half the workforce (Europe and the US). It did destroy many agricultural jobs as productivity rose, but many new jobs were also created, first in industry and later in the service sector. The computer revolution in the 1960s engendered a similar process.\r\n\r\nWhat lessons does the history of these three episodes hold for us? Firstly, the fears were relatively unfounded. Unemployment rates in the OECD today are the lowest on record. Secondly, technological revolutions led to educational revolutions: mass primary schooling was introduced during the first industrial revolution (children were no longer needed in craft workshops), mass secondary schooling with the agricultural revolution (young people were no longer needed on farms) and mass access to university for young people with the computer revolution. In my view, this time round the fourth industrial revolution will bring with it another educational revolution: lifelong learning. The challenges and opportunities shaped by technological developments will compel us to approach education as an ongoing process so that we can cope with the sweeping changes which are set to unfold in the labor market.\r\n\r\nAs Mark Twain once said: \u201cIt ain\u2019t what you don\u2019t know that gets you into trouble. It\u2019s what you know for sure that just ain\u2019t so.\u201d\r\n\r\nThis article was originally published in Spanish in <\/em>El Confidencial<\/em><\/a>.<\/em>\r\n\r\n \r\n\r\n\u00a9 IE Insights."],"wpcf-article-extract":["As the fourth industrial revolution brings fears of unemployment, what can history teach us about technology's impact on labor markets?"],"wpcf-article-extract-enable":["1"]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/1195925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/1195927"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=1195925"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=1195925"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=1195925"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=1195925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}