The Technology Trap

by Carl Benedikt Frey

  72. J. M. Abowd, P. Lengermann, and K. L. McKinney, 2003, “The Measurement of Human Capital in the US Economy” (LEHD Program technical paper TP-2002-09, Census Bureau, Washington).

  73. J. Tinbergen, 1975, Income Distribution: Analysis and Policies (Amsterdam: North Holland).

  74. C. Goldin and L. Katz, 2008, The Race between Technology and Education (Cambridge, MA: Harvard University Press).

  75. C. Goldin and Margo, 1992, “The Great Compression.”

  76. Goldin and Katz, 2008. The Race between Technology and Education, 303.

  77. Ibid., 208–17.

  78. Quoted in ibid., 177.

  79. Rothberg, 1960, “Adjustment to Automation in Two Firms,” 89.

  80. E. Weinberg, 1960, “A Review of Automation Technology,” Monthly Labor Review 83 (4): 376–80.

  81. T. Piketty and E. Saez, 2003, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118 (1): 2 and 24.

  82. B. Milanovic, 2016b, Global Inequality: A New Approach for the Age of Globalization (Cambridge, MA: Harvard University Press).

  83. Katz and Margo, 2013, “Technical Change and the Relative Demand for Skilled Labor.”

  84. Gordon, 2016, The Rise and Fall of American Growth, 47.

  85. Katz and Margo, 2013, “Technical Change and the Relative Demand for Skilled Labor,” 4.

  86. S. Thernstrom, 1964, Poverty and Progress: Social Mobility in a Nineteenth Century City (Cambridge, MA: Harvard University Press).

  87. Gordon, 2016, The Rise and Fall of American Growth, 126.

  88. Ibid., 379.

  89. A. J. Cherlin, 2013, Labor’s Love Lost: The Rise and Fall of the Working-Class Family in America (New York: Russell Sage Foundation), 115.

  90. Speech by John F. Kennedy in Cheyenne, Wyoming, September 23, 1960, https://www.jfklibrary.org/archives/other-resources/john-f-kennedy-speeches/cheyenne-wy-19600923.

  Part 4

  1. D. Acemoglu and D. H. Autor, 2011, “Skills, Tasks and Technologies: Implications for Employment and Earnings,” in Handbook of Labor Economics, ed. David Card and Orley Ashenfelter (Amsterdam: Elsevier), 4:1043–171.

  Chapter 9

  1. P. F. Drucker, 1965, “Automation Is Not the Villain,” New York Times, January 10.

  2. D. A. Grier, 2005, When Humans Were Computers (Princeton, NJ: Princeton University Press).

  3. On mortgage underwriters, see F. Levy and R. J. Murnane, 2004, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, NJ: Princeton University Press), 17–19.

  4. H. Braverman, 1998, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century, 25th anniversary ed. (New York: New York University Press), 49.

  5. N. Wiener, 1988, The Human Use of Human Beings: Cybernetics and Society (New York: Perseus Books Group).

  6. D. H. Autor and D. Dorn, 2013, “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market,” American Economic Review 103 (5): 1553–97; M. Goos, A. Manning, and A. Salomons, 2014, “Explaining Job Polarization: Routine-Biased Technological Change and Offshoring,” American Economic Review 104 (8): 2509–26, and 2009, “Job Polarization in Europe,” American Economic Review 99 (2): 58–63; M. A. Goos and A. Manning, 2007, “Lousy and Lovely Jobs: The Rising Polarization of Work in Britain,” Review of Economics and Statistics 89 (1): 118–33.

  7. Levy and Murnane, 2004, The New Division of Labor, 3.

  8. W. D. Nordhaus, 2007, “Two Centuries of Productivity Growth in Computing,” Journal of Economic History 67 (1): 128–59.

  9. J. S. Tompkins, 1958, “Cost of Automation Discourages Stores,” New York Times, January 26.

  10. The first microprocessor, invented in 1971, only paved the way for the IBM PC in 1981. Nordhaus’s calculations show that the greatest fall in the cost of computing occurred after the PC arrived.

  11. O. Friedrich, 1983, “The Computer Moves In (Machine of the Year),” Time, January 3, 15.

  12. K. Flamm, 1988, “The Changing Pattern of Industrial Robot Use,” in The Impact of Technological Change on Employment and Economic Growth, ed. R. M. Cyert and D. C. Mowery (Cambridge, MA: Ballinger Publishing Company), tables 7-1 and 7-6.

  13. E. B. Jakubauskas, 1960, “Adjustment to an Automatic Airline Reservation System,” in Impact of Automation: A Collection of 20 Articles about Technological Change, from the Monthly Labor Review (Washington: Bureau of Labor Statistics), 94.

  14. Ibid.

  15. Quoted in Levy and Murnane, 2004, The New Division of Labor, 4.

  16. Quoted in ibid.

  17. D. H. Autor, 2015, “Polanyi’s Paradox and the Shape of Employment Growth,” in Re-evaluating Labor Market Dynamics (Kansas City: Federal Reserve Bank of Kansas City), 129–177.

  18. M. Polanyi, 1966, The Tacit Dimension (New York: Doubleday), 4.

  19. According to the O-ring production function of Michael Kremer, an improvement in one task in the production of something makes the other tasks more valuable (1993, “The O-Ring Theory of Economic Development,” Quarterly Journal of Economics 108 [3]: 551–75).

  20. Levy and Murnane, 2004, The New Division of Labor, 13–14.

  21. R. Reich, 1991, The Work of Nations: Preparing Ourselves for Twenty-First Century Capitalism (New York: Knopf).

  22. E. L. Glaeser, 2013, review of The New Geography of Jobs, by Enrico Moretti, Journal of Economic Literature 51 (3): 827.

  23. H. Moravec, 1988, Mind Children: The Future of Robot and Human Intelligence (Cambridge, MA: Harvard University Press), 15.

  24. The share of labor hours in service occupations grew by 30 percent between 1980 and 2005. In the three decades before the computer revolution of the 1980s, in contrast, that share had been flat or declining (D. H. Autor and Dorn, 2013, “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market”).

  25. Levy and Murnane, 2004, The New Division of Labor, 3. See also D. H. Autor, F. Levy, and R. J. Murnane, 2003, “The Skill Content of Recent Technological Change: An Empirical Exploration,” Quarterly Journal of Economics 118 (4): 1279–333.

  26. A. J. Cherlin, 2014, Labor’s Love Lost: The Rise and Fall of the Working-Class Family in America (New York: Russell Sage Foundation), 128.

  27. Ibid.

  28. Douglas Massey defines social class by education, which he sees as the most important resource in our increasingly knowledge-based economy (2007, Categorically Unequal: The American Stratification System [New York: Russell Sage Foundation]). Andrew Cherlin also relies on education as the best indicator of social class for the post-1980 period (2014, Labor’s Love Lost). And Robert Putnam argues along similar lines (2016, Our Kids: The American Dream in Crisis [New York: Simon & Schuster]).

  29. G. M. Cortes, N. Jaimovich, C. J. Nekarda, and H. E. Siu, 2014, “The Micro and Macro of Disappearing Routine Jobs: A Flows Approach” (Working Paper 20307, National Bureau of Economic Research, Cambridge, MA).

  30. D. D. Buss, 1985, “On the Factory Floor, Technology Brings Challenge for Some, Drudgery for Others,” Wall Street Journal, September 16.

  31. G. M. Cortes, N. Jaimovich, and H. E. Siu, 2017, “Disappearing Routine Jobs: Who, How, and Why?,” Journal of Monetary Economics, 91:69–87.

  32. K. G. Abraham and M. S. Kearney, 2018, “Explaining the Decline in the US Employment-to-Population Ratio: A Review of the Evidence” (Working Paper 24333, National Bureau of Economic Research, Cambridge, MA).

  33. G. M. Cortes, N. Jaimovich, and H. E. Siu, 2018, “The ‘End of Men’ and Rise of Women in the High-Skilled Labor Market” (Working Paper 24274, National Bureau of Economic Research., Cambridge, MA).

  34. B. A. Weinberg, 2000, “Computer Use and the Demand for Female Workers,” ILR Review 53 (2): 290–308.

  35. D. Acemoglu and P. Restrepo, 2018c, “Robots and Jobs: Evidence from US Labor Markets” (Working paper, Massachusetts Institute of Technology, Cambridge, MA). Economists have found similar effects of robots on labor markets in Brit
ain (A. Prashar, 2018, “Evaluating the Impact of Automation on Labour Markets in England and Wales” [working paper, Oxford University]). In the German context, each additional robot led to two manufacturing jobs being lost, but these were offset by job creation elsewhere (W. Dauth, S. Findeisen, J. Südekum, and N. Woessner, 2017, “German Robots: The Impact of Industrial Robots on Workers” [Discussion Paper DP12306, Center for Economic and Policy Research, London]). That is not really surprising. Technological change inevitably interacts with different labor market institutions in different countries, and the relative strength of German trade unions is likely to go some way toward explaining these differences, as the authors argue. The general pattern across the industrial world, it seems, is that robots have not significantly reduced total employment, only low-skilled workers’ employment share. Automation, in other words, has caused employment opportunities for non-college-educated workers to dry up (G. Graetz and G. Michaels, forthcoming, “Robots at Work,” Review of Economics and Statistics).

  36. D. H. Autor and A. Salomons, forthcoming, “Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share,” Brookings Papers on Economic Activity.

  37. J. Bivens, E. Gould, E. Mishel, and H. Shierholz, 2014, “Raising America’s Pay” (Briefing Paper 378, Economic Policy Institute, New York), figure A.

  38. See M. W. Elsby, B. Hobijn, and A. Şahin, 2013, “The Decline of the US Labor Share,” Brookings Papers on Economic Activity 2013 (2): 1–63.

  39. L. Karabarbounis and B. Neiman, 2013, “The Global Decline of the Labor Share,” Quarterly Journal of Economics 129 (1): 61–103

  40. M. C. Dao, M. M. Das, Z. Koczan, and W. Lian, 2017, “Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence” (Working Paper No. 17/169, International Monetary Fund, Washington, DC), 11.

  41. B. Milanovic, 2016b, Global Inequality: A New Approach for the Age of Globalization (Cambridge, MA: Harvard University Press), 54.

  42. L. F. Katz and R. A. Margo, 2013, “Technical Change and the Relative Demand for Skilled Labor: The United States in Historical Perspective (Working Paper 18752, National Bureau of Economic Research, Cambridge, MA).

  43. Autor and Salomons, forthcoming, “Is Automation Labor-Displacing?”

  44. E. Weinberg, 1960, “Experiences with the Introduction of Office Automation,” Monthly Labor Review 83 (4): 376–80.

  45. Ibid.

  46. J. Bessen, 2015, Learning by Doing: The Real Connection between Innovation, Wages, and Wealth (New Haven, CT: Yale University Press), 111.

  47. Ibid.

  Chapter 10

  1. P. Gaskell, 1833, The Manufacturing Population of England, its Moral, Social, and Physical Conditions (London: Baldwin and Cradock), 6.

  2. Ibid., 9.

  3. W. J. Wilson, 1996, “When Work Disappears,” Political Science Quarterly 111 (4): 567.

  4. R. D. Putnam, 2016, Our Kids: The American Dream in Crisis (New York: Simon & Schuster), 7.

  5. Ibid.

  6. Ibid., 20.

  7. C. Murray, 2013, Coming Apart: The State of White America, 1960–2010 (New York: Random House Digital, Inc.), 47.

  8. Ibid., 193.

  9. W. J. Wilson, 2012, The Truly Disadvantaged: The Inner City, the Underclass, and Public Policy (Chicago: University of Chicago Press).

  10. R. Chetty, N. Hendren, P. Kline, and E. Saez, 2014, “Where Is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics 129 (4): 1553–623; R. Chetty and N. Hendren, 2018, “The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates,” Quarterly Journal of Economics 133 (3): 1163–228.

  11. See, for example, G. Becker, 1968, “Crime and Punishment: An Economic Approach,” Journal of Political Economy 76 (2): 169–217; I. Ehrlich, 1996, “Crime, Punishment, and the Market for Offenses,” Journal of Economic Perspectives 10 (1): 43–67, and 1973, “Participation in Illegitimate Activities: A Theoretical and Empirical Investigation,” Journal of Political Economy 81 (3): 521–65.

  12. C. Vickers and N. L. Ziebarth, 2016, “Economic Development and the Demographics of Criminals in Victorian England,” Journal of Law and Economics 59 (1): 191–223.

  13. E. D. Gould, B. A. Weinberg, and D. B. Mustard, 2002, “Crime Rates and Local Labor Market Opportunities in the United States: 1979–1997,” Review of Economics and Statistics 84 (1): 45–61.

  14. A. J. Cherlin, 2013, Labor’s Love Lost: The Rise and Fall of the Working-Class Family in America (New York: Russell Sage Foundation), figure 1.2.

  15. D. H. Autor, D. Dorn, and G. Hanson, forthcoming, “When Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Men” American Economic Review: Insights.

  16. L. S. Jacobson, R. J. LaLonde, and D. G. Sullivan, 1993, “Earnings Losses of Displaced Workers,” American Economic Review 83 (4): 685–709.

  17. D. Sullivan and T. Von Wachter, 2009, “Job Displacement and Mortality: An Analysis Using Administrative Data,” Quarterly Journal of Economics 124 (3): 1265–1306.

  18. A. Case and A. Deaton, 2015, “Rising Morbidity and Mortality in Midlife among White Non-Hispanic Americans in the 21st Century,” Proceedings of the National Academy of Sciences 112 (49): 15078–83.

  19. On technology and trade as possible causes of the mortality upsurge, see A. Case and A. Deaton, 2017, “Mortality and Morbidity in the 21st Century,” Brookings Papers on Economic Activity 1: 397. Yet the mortality puzzle documented by Case and Deaton remains an American phenomenon. As they note, trade and technology have had adverse impacts on labor markets elsewhere, too, but in Europe, for example, mortality rates are still falling across the board. If automation and globalization are behind the recent rise in mortality, institutions across the Atlantic must have done a better job at moderating its negative effects.

  20. On unemployment and well-being, see, for example, R. D. Tella, R. J. MacCulloch, and A. J. Oswald, 2003, “The Macroeconomics of Happiness,” Review of Economics and Statistics 85 (4): 809–27.

  21. A. E. Clark, E. Diener, Y. Georgellis, and R. E. Lucas, 2008, “Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis,” Economic Journal 118 (529): 222–43.

  22. A. E. Clark and A. J. Oswald, 1994, “Unhappiness and Unemployment,” Economic Journal 104 (424): 655.

  23. D. S. Massey, J. Rothwell, and T. Domina, 2009, “The Changing Bases of Segregation in the United States,” Annals of the American Academy of Political and Social Science 626 (1): 74–90.

  24. See, for example F. Cairncross, 2001, The Death of Distance: 2.0: How the Communications Revolution Will Change Our Lives (New York: Texere Publishing).

  25. A. Toffler, 1980, The Third Wave (New York: Bantam Books).

  26. T. L. Friedman, 2006, The World is Flat: The Globalized World in the Twenty-first Century (London: Penguin).

  27. E. L. Glaeser, 1998, “Are Cities Dying?,” Journal of Economic Perspectives 12 (2): 139–60.

  28. For an overview of the sources of agglomeration, see E. L. Glaeser and J. D. Gottlieb, 2009, “The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States,” Journal of Economic Literature 47 (4): 983–1028.

  29. E. L. Glaeser, 2013, review of The New Geography of Jobs, by Enrico Moretti, Journal of Economic Literature 51 (3): 832.

  30. E. Moretti, 2012, The New Geography of Jobs (Boston: Houghton Mifflin Harcourt), 1–2.

  31. Ibid., 3–4.

  32. T. Berger and C. B. Frey, 2016, “Did the Computer Revolution Shift the Fortunes of U.S. Cities? Technology Shocks and the Geography of New Jobs,” Regional Science and Urban Economics 57:38–45.

  33. T. Berger and C. B. Frey, 2017a, “Industrial Renewal in the 21st Century: Evidence from US Cities,” Regional Studies 51 (3): 404–13.

  34. E. L. Glaeser, 1998, “Are Cities Dying?,” 149–50.

  35. R. J. Barro and X. Sala-i-Martin, 1992, “Convergence,” Journal of P
olitical Economy 100 (2): 223–51.

  36. P. Ganong and D. Shoag, 2017, “Why Has Regional Income Convergence in the U.S. Declined?,” Journal of Urban Economics 102 (November): 76–90.

  37. G. Duranton and D. Puga, 2001, “Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products,” American Economic Review 91 (5): 1454–77.

  38. B. Austin, E. L. Glaeser, and L. Summers, forthcoming, “Saving the Heartland: Place-Based Policies in 21st Century America,” Brookings Papers on Economic Activity.

  39. Ibid.

  40. E. Moretti, 2010, “Local Multipliers,” American Economic Review 100 (2): 373–77.

  41. E. L. Glaeser, 2013, review of The New Geography of Jobs, 831.

  Chapter 11

  1. B. Moore Jr., 1993, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (Boston: Beacon Press), 418.

  2. F. Fukuyama, 2014, Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy (New York: Farrar, Straus and Giroux).

  3. In this regard America is a special case, as it never had a feudal system.

  4. Fukuyama, 2014, Political Order and Political Decay, 407–8.

  5. Ibid., 405.

  6. W. H. Maehl, 1967, The Reform Bill of 1832: Why Not Revolution? (New York: Holt, Rinehart and Winston), 1.

  7. T. Aidt and R. Franck, 2015, “Democratization under the Threat of Revolution: Evidence from the Great Reform Act of 1832,” Econometrica 83 (2): 505–47.

  8. D. Acemoglu and J. A. Robinson, 2006, “Economic Backwardness in Political Perspective,” American Political Science Review 100 (1): 115–31.

  9. G. Himmelfarb, 1968, Victorian Minds (New York: Knopf).

  10. This link, Lindert shows, was less pronounced after 1930, for the simple reason that most advanced economies now differ less in terms of their degree of democracy (P. H. Lindert, 2004, Growing Public, vol. 1, The Story: Social Spending and Economic Growth Since the Eighteenth Century [Cambridge: Cambridge University Press]).