Category Archives: Automation & Artificial Intelligence

Robots: Curse or Blessing? A Basic Framework

Source: Jeffrey D. Sachs, Seth Benzell, Guillermo LaGarda, National Bureau of Economic Research (NBER), NBER Working Paper No. w21091, April 2015
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From the abstract:
Do robots raise or lower economic well-being? On the one hand, they raise output and bring more goods and services into reach. On the other hand, they eliminate jobs, shift investments away from machines that complement labor, lower wages, and immiserize workers who cannot compete. The net effect of these offsetting forces is unclear. This paper seeks to clarify how economic outcomes, positive or negative, depend both on specific parameters of the economy and public policy. We find that a rise in robotic productivity is more likely to lower the welfare of young workers and future generations when the saving rate is low, automatable and non-automatable goods are more substitutable in consumption, and when traditional capital is a more important complement to labor. In some parameterizations the relationship of utility to robotic productivity follows a “noisy U” as large innovations are long-run welfare improving even though small innovations are immiserizing. Policies that redistribute income across generations can ensure that a rise in robotic productivity benefits all generations.

Robots at Work

Source: Georg Graetz, Guy Michaels, Centre for Economic Policy Research (CEPR), CEPR Discussion Paper No. DP10477, March 2015
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From the abstract:
Despite ubiquitous discussions of robots’ potential impact, there is almost no systematic empirical evidence on their economic effects. In this paper we analyze for the first time the economic impact of industrial robots, using new data on a panel of industries in 17 countries from 1993-2007. We find that industrial robots increased both labor productivity and value added. Our panel identification is robust to numerous controls, and we find similar results instrumenting increased robot use with a measure of workers’ replaceability by robots, which is based on the tasks prevalent in industries before robots were widely employed. We calculate that the increased use of robots raised countries’ average growth rates by about 0.37 percentage points. We also find that robots increased both wages and total factor productivity. While robots had no significant effect on total hours worked, there is some evidence that they reduced the hours of both low-skilled and middle-skilled workers.

The definitive guide to whether or not a robot will take your job

Source: Lydia DePillis, Washington Post, Wonkblog, March 23, 2015

In the midst of an international freakout about what is to become of us as robots learn to do for free the things humans do to make a living, it’s easy to feel lost in the flurry of papers and panels and general pontification on how terrified we ought to feel about it. We at Wonkblog have created a repository of evidence on all sides of the debate, and will maintain it as a public service as long as automation anxiety continues to be a thing.

Robots Are Us: Some Economics of Human Replacement

Source: Seth G. Benzell, Laurence J. Kotlikoff, Guillermo LaGarda, Jeffrey D. Sachs, National Bureau of Economic Research (NBER), NBER Working Paper No. 20941, February 2015
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From the abstract:
Will smart machines replace humans like the internal combustion engine replaced horses? If so, can putting people out of work, or at least out of good work, also put the economy out of business? Our model says yes. Under the right conditions, more supply produces, over time, less demand as the smart machines undermine their customer base. Highly tailored skill- and generation-specific redistribution policies can keep smart machines from immiserating humanity. But blunt policies, such as mandating open-source technology, can make matters worse.

AI, Robotics, and the Future of Jobs

Source: Aaron Smith and Janna Anderson, Pew Research Center, August 2014

From the Key Findings:
The vast majority of respondents to the 2014 Future of the Internet canvassing anticipate that robotics and artificial intelligence will permeate wide segments of daily life by 2025, with huge implications for a range of industries such as health care, transport and logistics, customer service, and home maintenance. But even as they are largely consistent in their predictions for the evolution of technology itself, they are deeply divided on how advances in AI and robotics will impact the economic and employment picture over the next decade.

We call this a canvassing because it is not a representative, randomized survey. Its findings emerge from an “opt in” invitation to experts who have been identified by researching those who are widely quoted as technology builders and analysts and those who have made insightful predictions to our previous queries about the future of the Internet. ….

Key themes: reasons to be hopeful
∙ Advances in technology may displace certain types of work, but historically they have been a net creator of jobs.
∙ We will adapt to these changes by inventing entirely new types of work, and by taking advantage of uniquely human capabilities.
∙ Technology will free us from day-to-day drudgery, and allow us to define our relationship with “work” in a more positive and socially beneficial way.
∙ Ultimately, we as a society control our own destiny through the choices we make.

Key themes: reasons to be concerned
∙ Impacts from automation have thus far impacted mostly blue-collar employment; the coming wave of innovation threatens to upend white-collar work as well.
∙ Certain highly-skilled workers will succeed wildly in this new environment—but far more may be displaced into lower paying service industry jobs at best, or permanent unemployment at worst.
∙ Our educational system is not adequately preparing us for work of the future, and our political and economic institutions are poorly equipped to handle these hard choices. ….

The Future Of Employment: How Susceptible Are Jobs To Computerisation?

Source: Carl Benedikt Frey and Michael A. Osborne, University of Oxford, September 17, 2013

We examine how susceptible jobs are to computerisation. To assess this, we begin by implementing a novel methodology to estimate the probability of computerisation for 702 detailed occupations, using a Gaussian process classifier. Based on these estimates, we examine expected impacts of future computerisation on US labour market outcomes, with the primary objective of analysing the number of jobs at risk and the relationship between an occupation’s probability of computerisation, wages and educational attainment. According to our estimates, about 47 percent of total US employment is at risk. We further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerization.

Future economy: Many will lose jobs to computers
Source: John Shinal, USA TODAY, March 21, 2014

More and more jobs are likely to be automated – and hence, fewer people will be needed to do them.

The Shift From Low-Wage Worker to Robot Worker
Source: Andrew Flowers,, March 25, 2014

It’s become commonplace for computers to replace American workers — think about those on an assembly line and in toll booths — but two University of Oxford professors have come to a surprising conclusion: Waitresses, fast-food workers and others earning at or near the minimum wage should also be on alert. … The minimum-wage occupations that Frey and Osborne think are most vulnerable include, not surprisingly, telemarketers, sales clerks and cashiers. But also included are occupations that employ a large share of the low-wage workforce, such as waiters and waitresses, food-preparation workers and cooks. If the computerization of these low-wage jobs becomes feasible, and if employers find it economical to invest in such labor-saving technology, there will be huge implications for the U.S. labor force….

The Job Apocalypse That Is Hiding From The Bureau of Labor Statistics
Source: Dean Baker, Center for Economic and Policy Research, Beat the Press blog, 27 March 27, 2014

…The problem with this story is that it is 180 degrees at odds with the data. Robots and computers seem to fascinate people as something new and different, but actually they are just forms of productivity growth. The issue is simply one of how fast we might expect these new technologies to increase productivity and displace workers. The answer we have been getting to date from the Bureau of Labor Statistics (BLS) is not very fast….

The coming job apocalypse
Source: Harold Meyerson, Washington Post, March 26, 2014

…Frey and Osborne acknowledge that there is a lot of speculation encoded in their equations. But even if they’re half right, or just a third right, that would mean that 23.5 percent or 15.7 percent, respectively, of U.S. workers face a future of employment extermination. I doubt that the mass acquisition of creative and social skills is sufficient to meet this challenge. The way to deal with such a job apocalypse would begin with the very measures that we have failed to enact to combat the cyclical downturn that began in 2008: a massive government program to build and repair our infrastructure and to provide the preschool education and elder care that the nation needs, which would increase consumption and economic activity generally….

Dancing with Robots: Human Skills for Computerized Work

Source: Frank Levy and Richard Murnane, Third Way, 2013

How do we ensure American middle class prosperity in an era of ever-intensifying globalization and technological upheaval? That is the question we are trying to answer with NEXT—a new project at Third Way that taps into cutting edge research by top American academics.

We all know about losing jobs to China, but what about losing jobs to the microchip?

In Dancing with Robots, Frank Levy and Richard Murnane show that the pressure on the middle class workforce in America has as much to do with the technology revolution and computerization of tasks as with global forces like China.

The authors argue that the challenge we face with computerized work is not mass unemployment, but rather educating far more young people for the higher wage jobs that computers cannot do—writing a convincing legal brief or diagnosing an automotive problem the factory had not foreseen.

Mastering the skills to perform well paid “human work” begins before kindergarten. It requires K-12 education in solving “messy” problems and in communication that many children never receive.