Impact of robots and globalization on the labor market (Episode 20)

Which jobs and tasks are most susceptive to be substituted by robots or being outsourced to low wage countries? Debates around these questions are highly emotional. Especially since the times of industrial revolution, the fear of technological unemployment has always been present – from “spinning jenny”, steam engine, railroads to computers, robots and algorithms. In the talk with Prof. Dauth we try to provide theories and facts from the field of economics to shed light on this debate.  Studies at the individual or firm level often find negative effects of both trade and automation on employment outcomes. However, this bears the danger to miss second-round effects. Analyses at the regional level allow us to observe how labor markets adjust to a new equilibrium, which often reveals very interesting insights.

What we have learned in the past decades are that massive technological changes have always lead to higher productivity, shifting tasks, positive well-fare-effects and employment growth. But will this also be true in the future and what can companies and individuals do to secure their spot in the (labor) market? How many and which jobs or tasks will be at risk?

Machines are no job-killers per se. Yet, the fear of unemployment is legitimate for certain groups at the labor market. Basically, machines are very good at doing repetitive, codified routines and they support the productivity of high-skilled labor. Tasks that are more interactive and creative and require humans to interact are less susceptible to be substituted. As technological progress or digitalization is hard to grasp, Prof. Dauth and his research partners took industrial robots in use as a variable for technological change. Jobs that are prone to be replaced by robots are characterized by routine tasks. These tasks can be found in the working environment of blue- and white-collar-workers.

What we can say for sure: on the one hand companies have to focus on product and process innovation as well as the promotion of their employees. On the other hand, individuals have to be aware that they cannot afford low qualification-levels – The best strategy is to develop a mindset of life-long-learning and focus on education and non-routine, interactive, creative tasks.

 Check out #20 Episode of the “WUEconomics – outside the box – Podcast” for more details and insights. 

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