Technology and the Future of Work
IMF Blog, May 1, 2018
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Bibliographic details
- Authors: Agustin Roitman, Adrian Peralta-Alva
- Published: May 1, 2018
Overview and context
- Authors: Agustin Roitman, Adrian Peralta-Alva
- Publication date: May 1, 2018
- Theme: How recent technological advances (artificial intelligence, automation and robotics) affect labor markets, wages, and inequality; policy responses to harness benefits and mitigate adverse effects.
- Historical context cited: Luddites movement at the outset of the Industrial Revolution; resurfaced during the Great Depression; again in the 1960s following a period of high productivity growth; and in the 1980s at the outset of the IT revolution.
Key findings and analysis
- Technological change has historically helped raise incomes for most, but transitions have been difficult for many workers, firms, sectors, and whole economies.
- Many observers think the latest wave of technological innovation will be more disruptive than past waves, especially for labor.
- Indicators of concern: timid growth of real wages and the falling labor share in national income in recent decades.
- Nature of current technologies: artificial intelligence, automation and robotics might be especially dramatic because of the presumed ease with which some technologies can substitute for a broad range of human skills.
- Not all labor is replaceable; artificial intelligence might transform jobs more than it will make them obsolete.
- Technological advances boost productivity, which over time creates new jobs and allows incomes and living standards to rise.
- IMF research indicates that current slow wage dynamics is related to low productivity growth.
Policy recommendations and country examples
- Primary policy goal: invest in peoples’ skills and build human capital to ensure broad access to opportunities from technological change.
- Facilitate labor reallocation and shorten periods during which labor remains idle:
- Strengthen, while keeping temporary, unemployment insurance to make re-allocation of labor easier.
- Make social benefits more portable.
- Example: Denmark combines flexible hiring and firing rules with extensive active labor market policies and relatively generous safety nets; the system is generally successful in matching labor supply and demand, and unemployment is low by international comparison.
- Expand and adapt education and training:
- More or more effective public spending on education, responsive to market demands.
- Provide opportunities for life-long learning.
- Example: Singapore offers unconditional grants to all adults for training throughout their working lives.
- Redistribution through the tax-benefit system to spread gains from technological advances:
- Use available fiscal space for redistribution to spread gains more equitably.
- Example: Canada cut the tax rate for middle income earners to strengthen the middle class, and more recently, made income tax benefits more generous, including by expanding eligibility.
- IMF research indicates that addressing inequality may be beneficial for growth.
- Tradeoffs and design considerations:
- Redistribution comes at the cost of efficiency.
- If governments design policies in the right way, all income groups can still gain.
Bottom line
- Technological advances present incredible economic and social opportunities, but they need to be supported by the right policies to ensure that they bring benefits to all.
Attribution
- This blog is based on the G-20 note on Technology and The Future of Work led by Helge Berger, Romain Duval, and Wojciech Maliszewski.
- To see the authors presentation, click on video above or click here.
IMF Blog: Technology and the Future of Work (Agustin Roitman, Adrian Peralta-Alva), May 1, 2018.
Content in this bundle
- Technology and the Future of Work; IMF Staff Note to Group of Twenty; April 2018
- sdn1402 - Executive Summary
