Automation fears and realities
Of the many justifications for introducing a universal basic income, automation is among the most popular. Over the past years, a slew of reports and endless media coverage has raised the specter of mass "technological unemployment"—a possible future that has been taken up by basic income proponents across the political spectrum. It was even a point of argument in this week's Democratic presidential debate.
In the first of a two-part series, historian AARON BENANAV (whose work on the history of unemployment categories we shared in a previous letter) critiques and situates the automation debates within long-term global trends. Framed as a response to what Benanav terms the "automation theorists," who maintain a sense of inevitability about the robot takeover, the paper pursues alternate explanations: declining labor demand, global deindustrialization, and manufacturing overcapacity.
From the paper:
“Automation turns out to be a constant feature of the history of capitalism. By contrast, the discourse around automation, which extrapolates from instances of technological change to a broader social theory, is not constant; it periodically recurs in modern history.
The return of automation discourse is a symptom of our era, as it was in times past: it arises when the global economy’s failure to create enough jobs causes people to question its fundamental viability. The breakdown of this market mechanism today is more extreme than at any time in the past. This is because a greater share of the world’s population than ever before depends on selling its labour or the simple products of its labour to survive, in the context of weakening global economic growth.”
- David Autor's 2016 paper "Paradox of Abundance" examines the problem of its title: "technological changes threatens social welfare not because it intensifies scarcity but because it augments abundance." Link.
- A previous newsletter highlights a paper by legal scholar Brishen Rogers, which critiques automation fears in the US context by pointing to labor law and the "fissuring" of the workforce as more consequential for stagnating wages and declining job security. Link. Along the same lines, but in the European context, Zachary Parolin's recent work for the OECD measures the effects of collective bargaining agreements on wages in automatable occupations. Link.
- Three post-debate accounts of the issue: Paul Krugman in the Times; Matt Yglesias in Vox; and Jordan Weisman in Slate, featuring the following quote from David Autor: "If we talk about the economic trauma of the 2000s, that’s not primarily due to automation. Nobody can tell you what great invention happened in 1999 that wiped out 20 percent of manufacturing jobs."
- For another broad view of macro trends and low-demand problems, see JW Mason's "Macroeconomic Lessons from the Past Decade." Link.
Monopsony and the gender wage gap
Postdoc at Microsoft Research SYDNEE CALDWELL and researcher at DeepMind EMILY OEHLSEN examine how labor market concentration affects the gender wage gap.
From the paper:
"The idea that this imperfect competition could lead to a gender wage gap dates back to Joan Robinson’s 1933 book, in which she coined the term monopsony. Women may earn less than men if they are, on average, less willing to leave their employer in response to changes in firm and market conditions. This can happen if women are more loyal to their employers (i.e. have higher average switching costs), have less information about their outside labor market opportunities, have different valuations for employer-provided amenities, or face smaller effective labor markets due to different commuting costs. However, without exogenous variation in the wages provided by a single firm it is difficult to produce credible measures of firm-specific elasticities, or to test whether these elasticities differ by gender.
We find that women have Frisch elasticities double those of men on both the intensive and extensive margins. However, women seem no less willing than men to switch firms in response to changes in relative wages. These results fail to support the hypothesis that gender differences in labor supply response are important for pay gaps for low-skilled workers."
Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you'd like to see shared here? Send it our way: email@example.com.
- The second of Lily Hu's two-part post on causal counterfactual reasoning and race in algorithmic fairness: "The critique of the methods that I venture here concerns the particular forms of reasoning about discrimination and equality that causal counterfactual methods require, and asks whether engaging such reasoning is: 1) plausible as a way of understanding discrimination as a distinct kind of moral (and legal) wrong and 2) practical as a means toward building fair decision systems." Link.
- "We present what we believe are the first measures of intergenerational mobility in the United States based on credit scores." A new report by Daniel Hartley, Bhash Mazumder, and Aastha Rajan at the Federal Reserve Bank of Chicago looks at the relationship between credit and inequality. Link.
- New data from the SHIFT project offers insight into how erratic work schedules impact the lives of service workers. Link.
- On Twitter this week Gabriel Zucman and Wojtek Kopczuk debated conceptualizations of corporate tax incidence, spurred by Zucman's new book with Emmanuel Saez. Link to Arindrajit Dube's helpful summary thread.
- Amy Ellen Schwartz and Michah W. Rothbart look at the impact of universal free meals (UFM) on school performance in New York City public schools. Their findings: "Increases in school lunch participation improve academic performance for both poor and non‐poor students; an additional lunch every two weeks increases test scores by roughly 0.08 standard deviations in math and 0.07 standard deviations in ELA." Link.
- Maxim Pinkovskiy finds not only that inequality in life expectancy is increasing across the US, but that this increase is largely driven by growing income disparities. Link.
- 250,000 miles of Roman Empire roads, in transit map form. Link. See also Stanford's "Geospatial Network Model of the Roman World." Link.
- "Even as the Latin American regional economy slowed over the past five years, Bolivia had the highest growth of per capita GDP in South America. The country’s solid economic growth has contributed substantially to the reduction of poverty and extreme poverty. This economic transformation was possible due to policy decisions, including a new constitution with significant economic mandates; public ownership of natural resources and some strategic sectors of the economy; and redistributive public investment and wage policies." A new CEPR report by Andrés Arauz, Mark Weisbrot, Andrew Bunker, and Jake Johnston. Link.
- In an article from February, Beccy Wilebore et. al draw on satellite imagery to analyze the impact of unconditional cash transfers on land use changes in the Gola Rainforest National Park, in Sierra Leone: "We find support for the hypothesis that unconditional payments, in this setting, increase land clearance in the short run." Link. ht Sidhya
- Twenty three individuals and organizations, including the Center for Democracy and Technology and Data and Society, have declared opposition to the HUD's proposed weakening of disparate impact liability: "The current 'burden-shifting framework' allows courts to examine the specific facts of the case and determine whether the facially neutral practice caused unjustified discrimination. Under the proposed modification, most algorithmic models that caused cognizable disparate impacts would never make it to this fact-specific inquiry." Link.
- "The Early Bronze Age (EBA) of the southern Levant was the first period in which many sites became fortified. This process reached its climax during the latter part of the period (namely Early Bronze III). Until recently, most scholars saw this phenomenon as an indication that the period was characterized by a high level of organized conflict. The following article analyses the fortifications of eight EBA sites, as well as other markers of warfare, and argues that the period's fortifications were built mainly to demonstrate a town's might and power while deterring potential attackers. Taking into account the rise of social complexity during the period, they were also used to consolidate the society through the construction process and possibly to control movement and serve as a boundary marker. Incipient leaders, who planned and coordinated the construction, used possible threats and the construction process to aggrandize themselves as being the ‘protectors’ of the settlement." Link.