[PPT] - Does Productivity Growth Threaten Employment? Robocalypse Now? David PowerPoint Presentation

SLIDE 1

Does Productivity Growth Threaten Employment? “Robocalypse Now?”

David Autor 1 Anna Salomons 2

1MIT 2Utrecht University

European Central Bank Annual Conference, Sintra, Portugal 27 June 2017

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 1 / 45

SLIDE 2

Longstanding concern: Automation threatens employment

Automation and Jobs: 200 Years of Concern

1. Luddites—Skilled weavers in the 19th century
2. U.S. Labor Secretary James Davis in 1927
3. Lyndon Johnson 1964 “Blue-Ribbon

Presidential Commission on Technology, Automation, and Economic Progress”

4. Wassily Leontief in 1982:

Role of workers will diminish — like horses

5. Right now!

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 2 / 45

SLIDE 3

Fundamentally, does rising productivity mean fewer jobs?

Citizen, policy-maker, intellectual concern

The more work done by machines, the less work done by people Steam-powered hammer vs. “steel-driving man”

Professional economic opinion

1

Elastic demand: Advancing sectors may expand (Bessen 2017)

2

Income effects: Rising wealth creates new demands (Clark 1951)

3

Sectoral reallocation: Advancing sectors contract, but labor moves to lagging sectors (Baumol 1967)

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 3 / 45

SLIDE 4

Productivity → Employment: An ‘Inverted U’ (Bessen ’17)

Employment first expands then contracts as productivity rises in textiles, iron, steel

Textile, Cotton, Fiber Workers Primary Iron & Steel Workers

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 4 / 45

SLIDE 5

Economists appear to be losing confidence in these long-held theories: “Robocalypse Now?”

Labor’s share of national income falling cross-nationally

.55

.6 .65 .7 Labor Share 1975 1985 1995 2005 2015

United States

.55 .6 .65 .7 Labor Share 1975 1985 1995 2005 2015

Japan

.35 .4 .45 .5 Labor Share 1975 1985 1995 2005 2015

China

.55 .6 .65 .7 Labor Share 1975 1985 1995 2005 2015

Germany

Karabarbounis and Neiman, 2014

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 5 / 45

SLIDE 6

It’s not just the falling labor share that has scholars worried...

An age of ‘brilliant machines’ (Brynjolfsson-McAfee ’14)

1

Computers managing financial portfolios, beating ’Go’ players

2

Websites and drones eliminating sales workers, warehouse workers

3

Robots leaving the assembly lines, coming for your jobs...

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 6 / 45

SLIDE 7

Economists have taken notice...

Emerging understanding makes clear that this can happen

Machines can directly replace specific job tasks, complement workers in other job tasks, possibly spur creation of new labor-using tasks Autor-Levy-Murnane ’03, Acemoglu-Autor ’11, Acemoglu-Restrepo ’16

Growing literature: models of labor immiseration

1

Inter-generational market failure: Sachs & Kotlikoff ’12, Berg et al. ’17

2

Task encroachment: No place left to hide (Susskind ’17)

3

New tasks might endogenously be created ‘fast enough’ – or perhaps not (Acemoglu & Restrepo ’16)

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 7 / 45

SLIDE 8

Evidence does not (yet) strongly support immiseration view

Vast literature makes clear that computerization has been skill-biased

Autor-Katz-Kearney ’08; Akerman-Kostol-Mogstad, ’14

But little work on overall employment impact of technological ∆0s

1

Alexopoulos-Cohen ’16: Technological progress strongly employment-creating — but in the 1910s–1940s

2

Gregory-Salomons-Zierahn ’16: Employment-reducing effects of Routine-Replacing Technical Change (RRTC) offset by compensatory demand + local spillover effects

3

Graetz-Michaels ’15: Industrial robots raising wages and value-added, raising demand for skilled workers across Europe (industry-level data)

4

Acemoglu-Restrepo ’17: Industrial robots lowering wages and employment in U.S. local labor markets

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 8 / 45

SLIDE 9

This paper asks: Is recent labor-augmenting technological progress eroding employment?

1 Does productivity growth cause advancing industries to grow or

shrink?

2 Do cross-industry spillovers offset or augment direct own-industry

effects—and what’s the net effect?

3 Has the employment-productivity relationship changed in the 2000’s? 4 Is productivity-growth skill-biased—should we worry about jobs or

skills?

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 9 / 45

SLIDE 10

Is recent labor-augmenting technological progress eroding employment?

Approach

Study the impact of productivity growth on employment across 19 countries, 37 years Focus on overall productivity growth: (1) output per worker, (2) value-added per worker, (3) total factor productivity

Outcomes

∆ Employment by industry ∆ Employment to working-age population—i.e., overall employment ∆ Final consumption by industry—corroborating productivity effects ∆ Skill inputs within industries ∆ Skill inputs economy-wide—due to induced sectoral shifts

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 10 / 45

SLIDE 11

Data sources and the ‘big picture’

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 11 / 45

SLIDE 12

Data sources and the ‘big picture’

Big picture: Employment rate usually rises with productivity

Employment growth, productivity growth positively covary, 1970–2007 (cf. Francis-Ramey ’04)

1 0 1 2 3 4
2 -1 0 1 2

1970 1990 2010 year

1. France
2 0

2 4 6

4 -2 0

2 4 1970 1990 2010 year

2. Germany
2 0

2 4 6

2 -1 0 1 2 3

1970 1990 2010 year

3. Japan
5

5 10

4 -2 0 2 4

1970 1990 2010 year

4. UK
2

2 4

4 -2 0

2 4 1970 1990 2010 year

5. USA
2 0

2 4 6

1 0 1

2 3 1970 1990 2010 year

6. Mean of all others

Employment to working age pop growth Labor productivity growth

Labor productivity growth Employment to working age population growth

Figures are for the total economy, excluding agriculture, public administration, private households and extraterritorial

rganizations. All growth rates obtained as log changes x 100. Graph 6 reports unweighted mean growth rates

across the remaining 14 countries. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 12 / 45

SLIDE 13

Data sources and the ‘big picture’

Not just the ’Big Five’ countries: Employment rates rise with productivity

5

5 10

4 -2 0 2 4

1970 1990 2010 year

1. Austria
2 0

2 4 6

2 -1 0 1 2 3

1970 1990 2010 year

2. Denmark
4 -2 0 2 4 6
4 -2 0

2 4 1970 1990 2010 year

3. Italy
4 -2 0

2 4

4 -2 0

2 4 1970 1990 2010 year

4. Netherlands
4 -2 0 2 4 6
4 -2 0 2 4 6

1970 1990 2010 year

5. Spain
5 0

5 10 15

10 -5 0

5 10 1970 1990 2010 year

6. South Korea

Employment to working age pop growth Labor productivity growth

Labor productivity growth Employment to working age population growth

Figures are for the total economy, excluding agriculture, public administration, private households and extraterritorial

rganizations. All growth rates obtained as log changes x 100. Graph 6 reports unweighted mean growth rates

across the remaining 14 countries. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 13 / 45

SLIDE 14

Data sources and the ‘big picture’

Data sources

Primary: EU KLEMS 1970-2007 (O’Mahony & Timmer ’09)

19 developed countries

AUS, AUT, BEL, DNK, ESP, FIN, FRA, GER, GRC, IRL, ITA, JPN, KOR, LUX, NLD, PRT, SWE, UK, USA

28 industries

All non-farm employment except public administration, private households, and extraterritorial organizations

Employment and labor productivity

Real gross output per worker, real value added per worker, total factor productivity (TFP) by country-industry-year

Additional measures: World Input Output Tables (WIOT)

Measuring consumption responses to productivity gains

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 14 / 45

SLIDE 15

Do ‘advancing’ industries grow or shrink?

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 15 / 45

SLIDE 16

Do ‘advancing’ industries grow or shrink?

Testing whether rising productivity raises or lowers employment...

Using KLEMS data for 17 countries, 25 industries, 37 years, fit country- by-industry- by-year stacked first-difference OLS model ∆lnEcit = 0 + 1∆lnLPcit + [↵c + t + i] + ✏cit

∆lnLPcit is growth in labor productivity i indexes industries c indexes countries t indexes years E is employment

Models are weighted by the time-averaged employment shares of industries within countries

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 16 / 45

SLIDE 17

Do ‘advancing’ industries grow or shrink?

What should happen to industry employment as ∆lnLPcit rises?

1

Lump-of-labor

Could fall one-for-one with labor productivity growth:

∂ ln Ei ∂ ln LPi = −1

2

Demand surge (iPhone, textiles)

Could surge as price/quality improve:

∂ ln Ei ∂ ln LPi > 0

3

Unbalanced growth (Baumol)

Could fall somewhat less than one-for-one: −1 <

∂ ln Ei ∂ ln LPi < 0

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 17 / 45

SLIDE 18

Do ‘advancing’ industries grow or shrink?

What does happen: Rising labor productivity → Falling industry employment

0.40
0.30
0.20
0.10

0.00 0.10 Estimated coefficient Gross output per worker Value added per worker Gross output based TFP No FE Country FE Country, year FE Country, year, industry FE Country*year, country*industry, industry*year FE 95% confidence interval

All models are estimated by OLS and control for population growth whenever country-year fixed effects are not included.

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 18 / 45

SLIDE 19

Do ‘advancing’ industries grow or shrink?

Rising labor productivity → Falling industry employment

Using gross-output based labor productivity growth: Found in every industry

0.90 -0.45

0.00 Estimated coefficient Mining Utilities Construction Food Textiles Wood Paper Refined petroleum Chemicals Rubber, plastic Non-metal mineral, nec Basic metals Machinery, nec Electrical equipment Transport equipment Manuf nec, recycling Education Health & social work Motor vehicle sale Wholesale trade Retail; hh goods repair Hotels, restaurants Transport, storage Real estate Comm, social & prsnl svcs Post & telecommunication Financial intermediation Business activities Util's, mining, construction Manufacturing Educ & health Low-tech svcs High-tech svcs 95% CI

From a model with a full set of industry interactions in all productivity terms; country, industry, and year fixed effects; and controlling for population growth. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 19 / 45

SLIDE 20

Do ‘advancing’ industries grow or shrink?

Reality check: Is there a consumption response? Check!

Consumption of industry output rises with industry productivity, even as employment falls

0.00 0.10 0.20 0.30 0.40 0.50 0.60 Estimated coefficient Gross output per worker Value added per worker No FE Country FE Country, year FE Country, year, industry FE 95% confidence interval

WIOD, 1995-2009. Models are estimated by OLS; contain country, year, and industry FE; and control for population growth. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 20 / 45

SLIDE 21

Do ‘advancing’ industries grow or shrink?

Unbalanced growth: Employment in ‘advancing’ sectors shrinks

Cumulative Productivity Growth Cumulative Change in Employment

15 30 45 60 75 90 105 120 100 x cumulative log change 1970 1980 1990 2000 2010 year Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services

Unweighted average across all 19 countries. Productivity is gross output based.

20
15
10
5

5 10 Share change (percentage points) 1970 1980 1990 2000 2010 year Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services

Shares normalized to 0 in 1970. Unweighted average across all 19 countries.

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 21 / 45

SLIDE 22

Reconciling industry and aggregate-level evidence

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 22 / 45

SLIDE 23

Reconciling industry and aggregate-level evidence

Negative employment impact at industry level but seemingly not at aggregate level. Why not?

Reconciling the evidence

Perhaps there are employment spillovers elsewhere in economy

1

Rising final demand — income effects

2

Inter-industry demand linkages

Use industry-level and country-level data to estimate

∆lnEcit = 0 + 1∆lnLPcit +

3

X

k=0

2+k∆ln f LPctk,j6=i[+↵c + t + i] + ✏cit f LPctk,j6=i is aggregate labor productivity excluding own-industry i LPcit is own-industry labor productivity c indexes countries t indexes years

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 23 / 45

SLIDE 24

Reconciling industry and aggregate-level evidence

Direct and spillover effects of productivity growth

Spillover effects fully offset internal effects: Net impact on emp/pop is weakly positive

1.20
0.80
0.40

0.00 0.40 0.80 1.20 1.60 2.00 Estimated coefficient Direct effect Spillover effect Net effect Gross output (GO) per worker Peak-to-peak (GO per worker) Trough-to-trough (GO per worker) Value added per worker Gross output based TFP 95% confidence interval

All models are estimated by OLS; contain country, year, and industry FE; and control for population growth. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 24 / 45

SLIDE 25

Reconciling industry and aggregate-level evidence

Is all productivity growth equally job-creating?

Industry productivity growth raises aggregate employment on average—but does it matter where productivity originates?

We have so far restricted effects of industry productivity to have uniform impacts But internal and external effects of productivity growth may vary across sectors

Relative weight in the economy Product market competition Demand saturation Integration in international production chains.

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 25 / 45

SLIDE 26

Reconciling industry and aggregate-level evidence

Is all productivity growth equally job-creating?

Allow direct effects and spillovers to differ by sector

1

Mining, utilities and construction

2

Manufacturing

3

Education and health

4

Low-tech services: Retail, sales, hotels, restaurants, etc.

5

High-tech services: Finance, business services, telecoms ∆lnEict = 0 +

5

X

s(i)=1

1,s(i)∆lnLPict +

5

X

s(i)=1 3

X

k=0

2+k,s(i)∆ln f LPctk,s(i),j6=i [+↵c + t + i] + ✏ict ˆ 1,s(i) are sector-specific effects of own-industry labor productivity ˆ 2+k,s(i) are sector-specific spillovers to other industries

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 26 / 45

SLIDE 27

Reconciling industry and aggregate-level evidence

Sizes of direct and spillover effects differ by sector

Manufacturing has least negative direct effect; low-tech services has largest positive spillovers

.5
.4
.3
.2
.1

.1 .2 .3 Estimated coefficient Direct effect Spillover effect Mining, utilities & construction Manufacturing Education & health Low-tech services High-tech services

Model is estimated by OLS; includes country, industry, and year FE; and controls for population growth. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 27 / 45

SLIDE 28

Adding it up

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 28 / 45

SLIDE 29

Adding it up

Translating direct+spillover effects into total emp/pop

What do direct + spillover effects imply for emp/pop in net?

Use estimates to infer how much each sector’s productivity growth has augmented or decreased total employment-to-population ∆ b Eict = {Eic,t=base × 1(i ∈ s) × b 1,s(i) × ∆lnLPict} +{Eic,t=base ×

5

X

s(i)=1 3

X

k=0

b 2+k,s(i) × ∆ln f LPctk,s(i),j6=i}

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 29 / 45

SLIDE 30

Adding it up

Implied cumulative direct effects of productivity growth on total ∆ employment-to-population in % pts, 1970–2007

15
10
5

Cumulative predicted ∆ employment (%) 1970 1980 1990 2000 2010 year Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services Total

Based on model 5 from Table 7; prediction averaged across all 19 countries. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 30 / 45

SLIDE 31

Adding it up

Implied cumulative spillover effects of productivity growth on total ∆ employment-to-population in % pts, 1970–2007

5 10 15 20 25 Cumulative predicted ∆ employment (%) 1970 1980 1990 2000 2010 year Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services Total

Based on model 5 from Table 7; prediction averaged across all 19 countries. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 31 / 45

SLIDE 32

Adding it up

Implied cumulative net effects of productivity growth on ∆ employment-to-population in % pts, 1970–2007

2

2 4 6 Cumulative predicted ∆ employment (%) 1970 1980 1990 2000 2010 year Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services Total

Based on model 5 from Table 7; prediction averaged across all 19 countries. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 32 / 45

SLIDE 33

Adding it up

Implied cumulative net effects of productivity growth on ∆ employment-to-population in % pts: Five largest economies

2

2 4 6 8 1970 1980 1990 2000 2010 year

1. France
1

1 2 3 4 1970 1980 1990 2000 2010 year

2. Germany
2

2 4 6 8 1970 1980 1990 2000 2010 year

3. Japan
2

2 4 6 8 1970 1980 1990 2000 2010 year

4. UK

2 4 6 1970 1980 1990 2000 2010 year

5. USA
2

2 4 6 8 1970 1980 1990 2000 2010 year

6. Mean of all others

Cumulative predicted Δ employment (%)

Based on model 5 from Table 7. Productivity is gross output per worker.

Mining, utilities, construction Manufacturing Education, health Low-tech services High-tech services Total

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 33 / 45

SLIDE 34

Adding it up

How big are these effects? Pretty big actually...

Actual changes in emp-to-pop vs. contribution of productivity growth: Five largest economies

48 50 52 54 56 1970 1990 2010 year

1. France

50 55 60 65 1970 1990 2010 year

2. Germany

60 62 64 66 68 70 1970 1990 2010 year

3. Japan

60 65 70 75 1970 1990 2010 year

4. UK

55 60 65 70 1970 1990 2010 year

5. USA

50 55 60 65 1970 1990 2010 year

6. Mean of all others

Actual Due to productivity growth

Employment to working age population (percent)

Figures are for the total economy, excluding agriculture, public administration, private households and extraterritorial organizations. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 34 / 45

SLIDE 35

Adding it up

What’s the key driver of job growth? Population growth!

Actual growth in total workers vs. contribution of population growth & productivity growth

15 20 25 30 1970 1990 2010 year

1. France

26 28 30 32 34 36 1970 1990 2010 year

2. Germany

45 50 55 60 65 1970 1990 2010 year

3. Japan

22 24 26 28 30 1970 1990 2010 year

4. UK

80100 120 140 160 1970 1990 2010 year

5. USA

60708090100 110 1970 1990 2010 year

6. Sum of all others

Actual Due to productivity growth Due to population growth Due to productivity & population growth

Employment in millions

Figures are for the total economy, excluding agriculture, public administration, private households and extraterritorial organizations. Productivity is gross output per worker. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 35 / 45

SLIDE 36

Is this time (period) different?

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 36 / 45

SLIDE 37

Is this time (period) different?

Productivity ⇒ Job growth: Is this time (period) different?

Productivity and job growth appear to diverge in some countries in 2000s (e.g., U.S.)

Consider whether the productivity-employment relationship has changed over time Why? Changing technologies, growing global production chains, shifting market structure, demand saturation

Add decade-specific effects to baseline equation

∆lnEict = 0 +

4

X

d(t)=1

1,d(t)∆lnLPict +

4

X

d(t)=1 3

X

k=0

2+k,d(t)∆ln f LPctk,j6=i +↵c + t + i + ✏ict where d(t) indicates decades

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 37 / 45

SLIDE 38

Is this time (period) different?

Internal effect more (–) and spillover less (+) in 2000s

But 2000s do not look very different from the 1980s

0.50
0.30
0.10

0.10 0.30 0.50 0.70 0.90 Estimated coefficient Direct effect Spillover effect Net effect 1970s 1980s 1990s 2000s 95% confidence interval

Model is estimated by OLS; contains country, year, and industry FE; and controls for population growth. Productivity is gross output based. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 38 / 45

SLIDE 39

Should we worry about jobs or skills?

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 39 / 45

SLIDE 40

Should we worry about jobs or skills?

Even if productivity growth is neutral for employment, may be non-neutral for skill demand

Labor productivity growth may shift skill demands in two ways

1

Skill bias: Firms may differentially eliminate low-, medium-, or high-skill workers

We find that this is not quantitatively important

2

Sector bias: ‘Advancing’ sectors shrink + ‘lagging’ sectors grow

High productivity growth in manufacturing and primary industries may shift the weight of employment towards more skill-intensive sectors This turns out to be quite important

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 40 / 45

SLIDE 41

Should we worry about jobs or skills?

Even if productivity growth is neutral for employment, may be non-neutral for skill demand

Scale predicted employment growth by industry by average share

f low-, middle-, and high- education workers

∆ b E q

ic,t=base = {E q ic,t=base × 1(i ∈ s) × b

1,s(i) × ∆lnLPict} +{E q

ic,t=base × 5

X

s(i)=1 3

X

k=0

b 2+k,s(i) × ∆ln f LPctk,s(i),j6=i}

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 41 / 45

SLIDE 42

Should we worry about jobs or skills?

Productivity growth has been strongly skill-biased 1970-2007 due to induced sectoral shifts

5 10 Cumulative predicted change (%) 1970 1980 1990 2000 2010 year High-skilled Medium-skilled Low-skilled

Based on model 5 from Table 7; prediction averaged across all 19 countries. Productivity is gross output based. Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 42 / 45

SLIDE 43

Should we worry about jobs or skills?

U.S. stands out for having most ‘polarized’ sectoral shifts: Reallocation towards high- and low-skill intensive sectors

5 10 15 1970 1980 1990 2000 2010 year

1. France

2 4 6 8 1970 1980 1990 2000 2010 year

2. Germany

2 4 6 8 10 1970 1980 1990 2000 2010 year

3. Japan

5 10 15 1970 1980 1990 2000 2010 year

4. UK

2 4 6 1970 1980 1990 2000 2010 year

5. USA

5 10 1970 1980 1990 2000 2010 year

6. Mean of all others

Cumulative predicted ∆ employment (%)

Based on model 5 from Table 7. 'Mean of all others' is unweighted average across all remaining 14 countries. Productivity is gross output based.

High-skilled Medium-skilled Low-skilled

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 43 / 45

SLIDE 44

Conclusions

Outline

1

Data sources and the ‘big picture’

2

Do ‘advancing’ industries grow or shrink?

3

Reconciling industry and aggregate-level evidence

4

Adding it up

5

Is this time (period) different?

6

Should we worry about jobs or skills?

7

Conclusions

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 44 / 45

SLIDE 45

Conclusions

Is productivity growth threatening employment? Not so far...

1

Employment shrinks in advancing sectors—but spillovers offset in lagging sectors

Net effect: Productivity growth modestly contributes to rising employment-to- population—as well as rising consumption “Robocalypse Later?” Virtuous relationship may have weakened in the 2000s. But see Hall (2017)

2

Distribution of productivity growth across sectors matters

Productivity growth in services produces largest positive spillovers Good news: Robotics have potential to raise productivity in services

3

Productivity growth good for employment, skill impacts non-neutral

Challenge is not quantity of jobs Challenge is quality of jobs available to low- and medium-skill workers

Autor & Salomons Does Productivity Growth Threaten Employment? “Robocalypse Now?” 45 / 45