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4: Studies of the Impact of Technological Change on Employment, Skills, and Earnings: A Critical Review
Pages 86-112

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From page 86...
... Neither does it appear that, as a result of technological change, the skills required to get a job or to keep a job in the future will be substantially different from what they are today. Finally, technological change and productivity growth are associated with growth in real earnings.
From page 87...
... Bureau of Labor Statistics (1986b) forecasts of employment and the policy-oriented studies by the Temporary National Economic Committee (1941)
From page 88...
... Moreover, despite its endorsement of the benefits of technology, the commission echoed the reports of the 1930s in expressing concern over a "glut of productivity." The historically unprecedented productivity growth rates of the postwar period were expected to continue, and the commission argued that increases in output per worker (i.e., labor productivity) would reduce the demand for labor if they were not offset by growth in the demand for output.
From page 89...
... analyzed almost 200 case studies of the employment effects of process innovations during 1940-1982. The technological advances considered by Flynn were evenly divided between those affecting the automation of production or distribution and those affecting office automation.
From page 90...
... Finally, the study ignored the employment implications of product innovations that result from office automation technologies, even though executives within the financial services industry, among other sectors, have cited such innovations as important sources of employment growth. Denny and Fuss (1983)
From page 91...
... By lowering prices and increasing the demand for industry output, labor productivity growth supported employment growth that offset much or all of the reduction in labor demand associated with the productivity-increasing impact of technological change. In three of the five industries (coal mining, iron mining, and aluminum production)
From page 92...
... Neither study considered the employment implications of the potential growth in output resulting from the positive effects of robots on manufacturing productivity growth, although Hunt and Hunt compared their displacement estimates with the BLS estimates of employment growth in affected occupations through 1995. The contrasting results of these studies, like those of the studies by Roessner et al.
From page 93...
... For many of the sectors in the TEMPO series, projected employment growth was low or even negative; these predictions were affected by the inability of the researchers to take into account interindustry linkages, by the low rate of growth of the British economy during the late 1970s and 1980s, and by the extensive penetration of many British markets by imports. Many of the studies examined capital productivity trends and reached conclusions resembling those of Baily (19861; in a number of British industries during the 1970s and early 1980s, the measured productivity gains from additional investments in physical capital appear to have declined somewhat for reasons that are not well understood.
From page 94...
... This means that there is no link between growth in labor productivity and growth in demand within a specific industry. Because input-output analysis typically projects the existing matrix of output and input requirements forward in time, predictions based on this methodology also have difficulty incorporating the employment effects of product innovation.
From page 95...
... Rates of diffusion and technological change were assumed to be rapid, but the authors did not allow for any output- and employment-expanding erects of reductions in the costs of clerical and other functions as a result of technological change and productivity growth. A more serious defect of the Leontief-Duchin study is that it combined an economy-wide analysis of employment impacts with the assumption that advances would occur in only one technology.
From page 96...
... Information technologies affected a number of the 11 occupations posting absolute declines in projected employment as a result of technological change (Table 4-11. The declining occupations fall into four groups: office workers involved primarily in data-entry tasks; communications workers who are displaced by declines in the service requirements of telecommunications equipment; truck and tractor operators affected by increases in warehouse automation; and 'The moderate-growth scenario used by BLS as the basis for industrial and occupational employment projections assumes strong productivity and investment growth, a declining unemployment rate (6 percent in 1995)
From page 97...
... A recent retrospective analysis of the employment effects of technological change used input-output methodology to decompose the growth in employment during 1972-1984 into changes resulting from growth in final demand and those resulting from technological advance in 79 industries (Young and Lawson, 1986~. The authors computed the changes in employment that would have resulted if the 1984 output had been produced with 1972 technology.
From page 98...
... Although this brief survey of recent empirical studies should lessen concerns about massive technological unemployment, technological displacement remains a potentially serious problem for some workers in the Sixty-one of the 65 industries in which technological change had a laborsaving impact also experienced increases in labor demand as a result of changes in final demand.
From page 99...
... Basic cognitive skills and job-related skills appear to be complementary; the real contribution of basic skills to productivity lies in helping workers learn what they need to do their current and future jobs (Bishop, 1984; COSEPUP Panel on Secondary School Education for the Changing Workplace, 19841. Most empirical studies of the impact of technological change on skills focus on job-related skills, which in many instances are acquired through on-thejob training (see Chapter 71.9 A substantial body of literature on the skill impacts of technological change has reached few consistent conclusions.
From page 100...
... . · Case studies of the impacts on skills of specific technologies or of technological change within a specific industry rarely consider a lengthy period of time; thus, they are unable to trace changes in skill requirements as a technology, industry, or production process passes through different stages of its development or diffusion (see Chapter 21.
From page 101...
... Hirschhorn (1984) reviewed similar evidence on changes in job content but reached the opposite conclusion, arguing that the shift toward increased responsibility required higher-order mental skills to ensure quick and appropriate responses to mechanical breakdowns.
From page 102...
... Continued advances in data-processing and office automation technologies have also changed the skills required for many of the support personnel employed in data-processing departments. Consistent with the argument that
From page 103...
... Even more than in the analysis of the employment impacts of technological change, the evidence on skill impacts has led us to stress the considerable uncertainties that pervade the issue. In examining educational and other policy responses to the challenges of technological change, it behooves policymakers and others to avoid planning based on inflexible commitments to a single (and almost certainly flawed)
From page 104...
... real compensation therefore depend on growth in labor productivity; far from supporting erosion in real earnings, technological change, by increasing labor productivity, is associated with increases in them. The stagnation in U.S.
From page 105...
... Although these estimates are based on aggregate data and represent average compensation losses, they are broadly consistent with survey data on earnings losses among displaced manufacturing workers (Podgursky, 1987~. Relatively well-paid, unionized, blue-collar workers in durables manufacturing have made disproportionate contributions to the displaced worker population, as was noted in Chapter 3, and many (but not all)
From page 106...
... TECHNOLOGICAL CHANGE AND THE DISTRIBUTION OF EARNINGS AND INCOME Trends in the distribution of income and earnings within the United States recently have received considerable attention (Blackburn and Bloom, 1985, 1986, 1987; Bluestone and Harrison, 1986; Harrison et al., 1986; Henle and Ryscavage, 1980; Kuttner, 1983; Lawrence, 1984; Levy, 1987; Levy and Michael, 1983, 1985; Medoff, 1984; Rosenthal, 1985~. Some analysts have attributed increased inequality in the distribution of income and wages to the growth of service sector employment and the development of "two-tiered" occupational structures within high-technology and service industries, both of which are widely perceived to result from technological change (Industrial Union Department, 19841.
From page 107...
... In the case of total household income, increased inequality reflected increases in the number of households classified as "upper middle" or "upper" class, at the expense of middle class households. The distribution of household earnings displayed a similar trend while also exhibiting growth in the number of households whose total earnings placed them in the "lower" class.
From page 108...
... Without additional data and analysis, it is difficult to determine the significance or durability of any trend toward greater inequality in the earnings distribution. Explaining the Trends The trends in the distribution of household income reflect changes in the structure of the American family and increased participation by '5The results of the Henie-Ryscavage analysis conflict with the findings of Harrison et al.
From page 109...
... The current share of manufacturing within total U.S. employment is sufficiently small, and the size of the middle-income share of the manufacturing work force sufficiently resembles that of nonmanufacturing, that movements of labor out of manufacturing have little effect on recent earnings trends (Lawrence, 1984~.'7 Moreover, the characteristic form of structural change within this economy does not involve a large net outflow of labor from manufacturing into nonmanufacturing employment; rather, it reflects more rapid employment growth in the nonmanufacturing sector than in manufacturing industry.
From page 110...
... Because of low productivity growth, these new entrants have not experienced the rapid increases in earnings that had characterized previous cohorts. The lower end of the earnings distribution thus appears to have expanded as a result of demographic and productivity trends rather than because of technological or structural changes (Levy and Michael, 1985~.
From page 111...
... Earnings, rather than household incomes, is the variable that should be most responsive to technologically induced changes in employment opportunities; but the hypothesis that the distribution of earnings has become more unequal receives limited support from the data. The data on the earnings distribution (e.g., Henle and Ryscavage, 1980)


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