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Does technology create or destroy jobs?

I think its a bit of both -- jobs in some sectors die out, while jobs in other sectors are
created. Yet four years into an economic recovery, and millions of people are still out
of work, leading many to ask if jobs are being replaced by machines.
But Google Chairman Eric Schmidt is taking the optimist's route."New jobs are not
created by small businesses but by new businesses, many of which have a
technological component," Schmidt told economists gathered at the National
Association of Business Economics conference. "Technology will create pportunities
for new types of jobs tomorrow."
Just what kind of jobs?
Healthcare, transportation, education, and creative industries like movies and music
are all sectors that stand to benefit from rapid advances in technology and data
analysis, he said.
Take transportation. While city streets may be gridlocked, there's plenty of space in
the air. This presents opportunities for a big change in personal transport -- he
mentioned miniature electric helicopters.
In healthcare, analytic tools can be implemented into smart phones, alerting doctors
to health problems.But while technology will do the heavy lifting in terms of numbers
analysis, it will still need a human component making the decisions.
"The computer needs someone to talk to," said Schmidt, who was Google's CEO
from 2001 to 2011. "Pilots will still fly planes, the elderly will still need caregivers," he
said.
In the music and entertainment industries, he likened the crowd-funding
site Kickstarter to the National Endowment for the Arts -- funding creative
endeavors on a grand scale.
In fact, since the digital revolution, he said the arts and entertainment industries have
grown by 50%."It's working, and the growth has been phenomenal," he said.
So what's needed to bring more of this growth? Better government policies, for
starters.
The Pew Research Center yesterday released a report on the future of technology
and robotics. The center interviewed about 1,900 experts on the topic and asked
them about the effect of future technology on employment. Would new technology
create jobs on net or would it destroy jobs?
The results were just about split down the middle, with half of the experts saying
technology would be a net job creator and the other half disagreeing. Attempts at
projecting the future of our economy dont have a sterling track record. But the
evidence from the effects of past technological change on the labor market points

toward a future where technology doesnt destroy jobs after factoring in the new
ones created by technological innovation.
David Autor, an economist at the Massachusetts Institute of Technology, has done
some of the leading work on how technological change affects the labor market. He
is a leading proponent of the argument that skill-biased technological change, or
technological change that complements the skills of highly educated workers,
increases demand for those workers. At the same time, this change reduces the
demand for workers with skills that are made redundant by technology. These
workers dont end up unemployed, but rather move to a different occupation. Such
job polarization contributes to increased economic inequality.
The model has its short comings, but its useful for thinking about how technology
affects the labor market. This might be easier to understand when compared to
another factor, increased international trade. Autor along with his co-authors David
Dorn of the Centro de Estudios Monetarios y Financieros in Madrid and Gordon
Hanson of the University of California-San Diego have done research trying to
untangle the effects of trade and technology on the labor market. In one study, the
three economists look at the changes in the labor market from 1990 to 2007a
period where policymakers liberalized trade and technological change was quite
rapid.
Autor, Dorn, and Hanson found that trade and technology had very different effects.
The authors disentangle these effects by looking at differences across labor markets
within the United States. Some markets were more exposed to imports from China
while other markets employed more workers in routine occupations. What they found
was that areas more exposed to increased imports saw significant declines in
manufacturing employment as well as well as total employment. In local labor
markets more exposed to technological change, total employment didnt decline.
Rather, declines in routine employment were offset by gains in other areas.
In short, increased foreign trade led to job losses while technology led to job
polarization.
Technology is one of the key drivers of long-term economic growth. Advancements in
information technology, robotics, and other promising technologies emerging out of
the materials sciences and biology offer the promise of increased productivity and
therefore economic growth in the years to come. But past technological shifts in the
economy have not been so unambiguously positive for workers. The technology
changes afoot today may not reduce total employment, but by disrupting current
occupations these changes could be a major driver toward rising inequality.
Policymakers need to consider how they can help workers adjust to these shocks
and create a labor market where the benefits of increased productivity are broadly
shared as new technologies create new employment opportunities and challenges.