João Guerreiro, Sérgio Rebelo, Pedro Teles, 20 August 2020

How should public policy respond to the impact of automation on the demand for labour? This column uses a theoretical model of automation to study whether it is optimal to tax robots. It finds that it is optimal to tax robots in the short run but not in the long run in order to protect current routine workers who cannot acquire non-routine skills, while incentivising those in the future to acquire non-routine skills. 

Jens Südekum, Joel Stiebale, Nicole Woessner, 30 July 2020

The claim in a 2016 report from The Economist that a small group of ‘superstar firms’ were “once again dominating the global economy'' referred mostly to American internet giants, but recent research suggests that previous decades were more broadly characterised by a reallocation of market shares towards highly productive and profitable firms, with notable implications for competition, market power, and the income distribution. This column argues that a superstar firm pattern is also present in European manufacturing, and that it is considerably stronger in manufacturing branches in which industrial robots have been on the rise. Technological change seems to be a key driver for the emergence of superstar firms.

Cevat Giray Aksoy, Berkay Ozcan, Julia Philipp, 16 July 2020

At a moment when policymakers are putting increased efforts into tackling gender gaps in the labour market, it is worth asking whether robotization could worsen pay disparities between men and women. Using new evidence from 20 European countries, this column finds that men at medium- and high-skill occupations disproportionately benefit from robotisation, especially in countries where gender inequality was already severe. The authors recommend that governments pay attention to automation’s distributional issues, and increase their efforts to equip women and men equally with the skills most relevant for future employability. 

David Bloom, Klaus Prettner, 25 June 2020

Over the last decade there has been a tremendous progress in automation. Many tasks previously seen as un-automatable can now be performed without human labour, and the number of industrial robots in use has increased sharply. This column describes the recent trends in automation and argues that its principal effects are to increase output per capita at the expense of rising inequality. Advancing technologies have mainly replaced the routine tasks of low-skilled workers, while the incomes robots generate flow to wealthier capital owners. The current COVID-19 pandemic is likely to reinforce these trends, raising the need for a policy response.

Ester Faia, Sébastien Laffitte, Maximilian Mayer, Gianmarco Ottaviano, 17 June 2020

Understanding the effects of automation and offshoring on labour markets and growth has been a significant topic of interest. This column argues that automation and offshoring fundamentally affect the matching between firms and workers and do so in contrasting ways. It predicts that automation will increase firms’ and workers’ job selectivity and decrease employment, while offshoring will have the opposite effect. Empirical evidence as well as a quantitative model support this hypothesis and provide a mechanism of technological change typically missed in standard neoclassical reasoning.

Richard Baldwin, 29 May 2020

Has Covid accelerated the future of work? This column argues that Covid has changed the future of work via four shocks: massive job losses, massive digital transformations, massive debt burdens, and massive costs of socially distanced office space. These matter in two ways. First, due to sunk cost hysteresis, re-hiring workers is very different than retaining workers. Second, the digital transformations, office-space costs, and debt burdens will push firms to replace domestic workers with ‘telemigrants’ or ‘white-collar robots’. The jobs that return will be those that require face-to-face interactions and involve tasks that AI cannot handle. 

Adnan Seric, Deborah Winkler, 28 April 2020

The COVID-19 pandemic has exposed the vulnerabilities of global value chains. In response to supply chain risks, global lead firms have relied on Industry 4.0 technologies as well as reshoring parts of production. This column explores the potential impacts of these developments on the breadth and depth of global value chains. Automation and reshoring allow for more flexible adjustment to changing demand and the mitigation of supply-side risks. Ultimately, the implications of automation on development will depend on both the types of foreign inputs sourced as well as the relationship between robots and labour.

Hal Varian, 30 March 2020

Several recent studies have considered the impact of automation on labour demand in the coming decades. But demand is only one side of the labour market – the supply of labour will also change dramatically in the next 50 years due to demographic effects. This column discusses how the net outcome for wages and employment will depend on the relative magnitude of these shifts in demand and supply. The supply-side effects due to demographic forces appear likely to be somewhat greater than the demand-side changes due to automation for at least the next decade, and possibly longer.

David Klenert, Enrique Fernández-Macías, José-Ignacio Antón, 24 February 2020

Opinion polls reveal that Europeans are greatly concerned about the economic consequences of advanced technologies, but our understanding of this relationship is still incomplete. This column assesses the impact of one such technology – industrial robots – on employment in Europe over the last two decades. Combining industry-level data on employment with data on robot adoption, it finds that robot use is linked to a small but significant increase in employment. Contrary to some previous studies, it does not find evidence of robots reducing the share of low-skill workers across Europe.

Henrique Basso, Juan F Jimeno, 29 November 2019

Advanced economies will face large demographic and radical technological change in the next decades. This column shows how demographics and endogenous technological changes, which encompass both innovation and automation, can interact to limit the future prospects for growth and alter the factor income distribution. Due to a trade-off between innovation and automation, lower fertility and population ageing are likely to generate more automation, but also lead to a reduction in GDP per capita growth and the labour income share.

Carl Benedikt Frey, Ebrahim Rahbari, 04 November 2019

Mechanisation during the Industrial Revolution accelerated economic growth and prosperity in the long term, but it was fiercely opposed by workers who did not share in its short-term gains. This column argues that similar forces are at play today. A new revolution in automation is eliciting resistance since it threatens to render jobs redundant. The column proposes policy interventions to raise productivity and prosperity in the short term, to reap the benefits of the new technologies in the long term.

Sotiris Blanas, Gino Gancia, Tim Lee, 10 October 2019

Since the early 1980s, technology has reduced the demand for low and medium-skill workers, the young, and women, especially in manufacturing industries. The column investigates which technologies have had the largest effect, and on which types of worker. It finds that robots and software raised the demand for high-skill workers, older workers, and men, especially in service industries. 

James Bessen, 12 September 2019

Do industries shed or create jobs when they adopt new labour-saving technologies? This column shows that manufacturing employment grew along with productivity for a century or more, and only later decreased. It argues that the changing nature of demand was behind this pattern, which led to market saturation. This implies that the main impact of automation in the near future may be a major reallocation of jobs, not necessarily massive job losses.

David Kunst, 09 August 2019

Has technological progress in manufacturing been skill-biased or deskilling? This column argues that the conventional distinction between white-collar and production workers has concealed substantial deskilling among manufacturing production workers since the 1950s. Automation has reduced the demand for skilled craftsmen around the world, thereby reducing the number of jobs in which workers with little formal education could acquire significant marketable skills.

Lene Kromann, Anders Sørensen, 15 July 2019

The automation of production processes is an important topic on the policy agenda in high-wage countries, but evidence of the economic effects of automation at the firm level is limited. This column presents insights on automation from new survey data for Denmark. The findings reveal that variation in the adoption of automation technologies is high, the change in adoption over time is slow, and almost half of Danish manufacturing firms relied greatly on manual production processes in 2010. Increasing international competition from China is a driver for investments in automation.

Michael Koch, Ilya Manuylov, Marcel Smolka, 01 July 2019

The rise of robots has sparked an intense debate about the labour market effects of their adoption. This column explores differences in robot adoption across firms and analyses the labour market effects of robot adoption at the firm level. It reveals a productivity-enhancing reallocation of labour and market shares across firms, with robot-adopting firms creating new job opportunities and expanding their scale of operations, while non-adopters experience negative output and employment effects in the face of tougher competition.

Jacques Bughin, Christopher Pissarides , Eric Hazan, 28 May 2019

Artificial intelligence promises economic growth as well as creating fear for those whose jobs it may replace. This column takes a wider approach to examining how AI and other technologies will affect citizens’ welfare beyond just their income. It argues that the new technologies are intrinsically neither good nor bad, it is how they are deployed and how the transition is crafted that conditions the welfare dynamics of societies. 

Susan Lund, Jacques Bughin, 10 April 2019

The history of trade reflects the ongoing march of technological innovation. This column argues that despite today’s increased trade tensions, rising nationalism, and slowdown in global goods trade, globalisation is not in retreat. Instead, it is entering a new chapter that is being driven by flows of information and data, as well as technological changes that are reshaping industry value chains.

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