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IZA – Institute of Labor Economics

Will robots take over? How automation changes the world of work

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Technological change has advanced digitalization and automation in a number of industries, raising fears that human workers will eventually become redundant. Recent studies predict that almost half of existing jobs are at risk of becoming extinct due to this process. But how grim are the prospects really for human workers? Hilmar Schneider discussed this topic in the recent edition of “Made In Germany,” a business program of Deutsche Welle TV.

Schneider pointed out that this pessimistic outlook is based on gross figures. It’s easy to see what gets destroyed by new technologies, but it’s hard to see the jobs that emerge, he said. “Imagine in 1995, when the Internet was starting up, someone having to predict what type of jobs would emerge within the next five years. No one would have been able to do that.” What we have learned from technological change in the past is that “people became wealthier, jobs became easier, and work did not disappear – it just changed.”

While low-skilled workers who perform primarily mechanical tasks can be replaced by robots, and computers can be used for anything that can be “coded,” humans remain superior to machines in all areas related to creativity and social interaction. “This is something that machines up to now – and probably also in the next couple of decades – will not be able to do,” predicted Schneider.

Watch the video:

A note from the new Editor-in-Chief: Daniel Hamermesh about IZA World of Labor

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I have just begun my tenure as Editor-in-Chief of IZA World of Labor (WoL), and I am thrilled to be part of this enterprise. I have devoted a 50-year career to labor economics, a field increasingly growing in importance and one in which we have accreted a large, new knowledge base over this last half-century. The importance of WoL lies in the fact that it provides an understandable and accessible way of exposing and exploring that knowledge base. Furthermore, by linking that base to policy, it enhances the possibility that what we know will be used to inform policy and—at least as important—will enhance the background knowledge of ordinary citizens, the latter being so important in determining which policies are instituted.

The “one-pagers”—the Elevator Pitch, the Pros and Cons, and the Author’s Main Message—that constitute the front of each article provide a unique format. They enable the reader to grasp, nearly at a glance, the essence of the discussion and evidence on the particular labor issue on which the article focuses. As such, they provide a succinct and easy means of understanding how a policy or more general labor-market issue should be approached.

I refer to “the reader,” but who are the readers at whom is this project is aimed? The majority of WoL entries should be readable by any individual with a secondary-school education. They are NOT designed as technical pieces aimed solely at an audience of specialists. Rather, they are meant to be used by:

  1. Policymakers and their staffs. Whenever a policy issue related to labor markets and labor issues arises, these people should immediately think of WoL and use it to access easily the essential information underlying the policy issue of concern, and advice on how to resolve the issue.
  2. Employers, union leaders and members. These agents are repeatedly called upon to react to policy proposals, often on short notice and quickly. WoL allows them to do this by presenting the best available thought on specific topics.
  3. Journalists spend much of their time finding “experts” to interview about the topic on which they are writing. This potentially costly search often leads them to rely on local experts or other “familiars”, who often are not the leading authorities on the topic. WoL greatly reduces the costs of searching for experts by summarizing expert opinion and providing ready access should the journalist wish to interview the expert.
  4. Intelligent laypeople who wish to learn about a specific labor policy. More citizens have realized that the cost of acquiring information on things that pique their interest has dropped. Accordingly, more are seeking information about these issues, out of general curiosity, out of a desire to be able to speak in an informed manner about an issue with their peers, and out of an interest in becoming better-informed voters. WoL provides the most readily accessible and understandable source of information on these issues of increasing interest.

My ambitions as the new Editor-in-Chief are to refine the remaining topics, to fill in gaps in the existing articles by inviting submissions from new authors on pre-selected topics, and to ensure that the four groups of readers understand how useful and important these articles are to them.

—
Daniel S. Hamermesh, Editor-in-Chief, IZA World of Labor and
Professor of Economics, Royal Holloway University of London

Don’t be afraid of the future of work! Werner Eichhorst explains current labor market trends

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A new book edited by Werner Eichhorst and Paul Marx looks at Non-Standard Employment in Post-Industrial Labour Markets. Examining the occupational variation within non-standard employment, the book combines case studies and comparative writing to illustrate how and why alternative occupational employment patterns are formed.

[Read more…] about Don’t be afraid of the future of work! Werner Eichhorst explains current labor market trends

Carmel Chiswick on the effect of economic choices for religious traditions

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In a video interview, IZA Fellow Carmel U. Chiswick (George Washington University) talks about the link between economic choices and religious traditions.

She states how economic incentives can be the context for religious traditions and what the economic choices are when you are born into a particular religion. Furthermore, Chiswick explains how international migration affects religious observance of migrants. Finally, she addresses the role of religious laws.


 

For more information on this topic see Carmel Chiswicks’s book on Judaism in Transition: How Economic Choices Shape Religious Traditions.

Barry Chiswick on the design of immigration policies

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In a video interview, IZA Fellow Barry Chiswick (George Washington University) talks about the design of immigration policies.

He explains how today’s immigration policy can draw on the U.S. experience with mass immigration a century ago, and whether the current annual flow of non-OECD immigrants into OECD countries is too high or too low. Moreover, Chiswick comments on the U.S. approach of focusing on border enforcement to control illegal or unauthorized immigration.


 

For more information on migration economics see related articles in IZA World of Labor.

David Neumark on the employment effects of minimum wages

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In a video interview, IZA Fellow David Neumark (University of California, Irvine) talks about the employment effects of minimum wages – one of the most hotly debated issues in labor economics.

Although a minimum wage policy is intended to ensure a minimal standard of living, unintended consequences undermine its effectiveness, says Neumark. Widespread evidence indicates that minimum wage increases are offset by job destruction. Furthermore, the evidence on distributional effects, though limited, does not point to favorable outcomes, although some groups may benefit.

For more information on this topic see David Neumark’s article on Employment effects of minimum wages published in IZA World of Labor.

Solomon Polachek on equal pay and the gender wage gap

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In a video interview, IZA Fellow Solomon Polachek (State University of New York at Binghamton) talks about equal pay and the gender wage gap.

He explains that equal pay policies based on wage outcomes have had little effect on the gender wage gap. Instead, economic policies that promote human capital accumulation and greater lifetime work for women – e.g. subsidizing day care and abolishing marriage taxes – can successfully reduce the gender wage gap further.


 

For more information on equal pay and the gender wage gap see a related article by Solomon Polachek entitled Equal pay legislation and the gender wage gap, which has been published on IZA World of Labor.

Peter Kuhn on the internet as a labor market matchmaker

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Since the internet’s earliest days, firms and workers have used various online methods to advertise and find jobs. Until recently there has been little evidence that any internet-based tool has had a measurable effect on job search or recruitment outcomes. However, recent studies, and the growing use of social networking as a business tool, suggest workers and firms are at last developing ways to use the internet as an effective matchmaking tool. In addition, job boards are also emerging as important for the statistical study of labor markets, yielding useful data for firms, workers, and policymakers.

Read more in an article for IZA World of Labor watch this video interview with author, Peter Kuhn (IZA Visiting Research Fellow from UC Santa Barbara).


Fixed-term contracts: Dead-end jobs or useful stepping stones? Video interview with Werner Eichhorst

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Fixed-term contracts have become a major form of employment in Europe. While proponents regard them as an important stepping stone to permanent employment, critics deride them as dead-end jobs. Who is right? That depends on the institutional and economic environment, as Werner Eichhorst explains in a video interview.

Fixed-term contracts can be a pathway from unemployment to employment, but their potential as a stepping stone to permanent employment is undercut if there is a strong degree of segmentation in labor markets. Then the labor flexibility motive of employers ends up dominating the screening function for permanent hires.

To counter the trend toward labor market dualization, Eichhorst suggests that policymakers should narrow the gap between contract types by easing dismissal protection for permanent contracts while at the same time strengthening the employment stability of fixed-term contracts.


For more detailed information, see Werner Eichhorst’s article on Fixed-term contracts in the IZA World of Labor.

Employee performance and the value of the bosses: Video interview with Kathryn Shaw

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Employees should ultimately be paid for performance, not for working hours, says Kathryn Shaw (Stanford University and IZA) in a video interview. If hourly wages are paid, that entails choosing high-performing employees carefully. While wage inequality within firms serves to boost performance, equality of opportunity is what really matters, says Shaw.

Her research finds that the performance of bosses has a substantial impact on firm productivity. Ideally, “they train, they motivate, they inspire, they employ,” she says.


Kathryn Shaw is the subject editor for Behavioral and Personnel Economics at the IZA World of Labor.