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Current Economic Issues > Automation Anxiety > Flashcards

Automation Anxiety Flashcards

(51 cards)

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1
Q

What is automation anxiety

A
  • A long-running concern in economics and in society more generally- technological change will destroy jobs and create unemployment
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2
Q

What did Queen Elizabeth do following the invention of mechanical knitting

A

Refused the inventor a patent given she recognised the damage it could cause to current workers’ jobs

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3
Q

What did Keynes say about technological change

A
  • We would undergo a temporary phase of maladjustment where technological change outstrips the use of labour
  • Ultimately would lead to improvement in living standards
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4
Q

What was the conclusion of president Johnson’s commision on technology and automation

A
  • Technology eliminates jobs not work
  • It does not threaten employment
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5
Q

What workers suffer due to technological change

A

Workers with ordinary skills and abilities

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6
Q

What did Frey and Osborne find the % of employment in high risk of automation in US in 2017

A

47

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7
Q

How have specific industries been affected

A
  • Services have seen an increase
  • Manufacturing has declined
  • Government stayed same roughly
  • Agriculture has been low for a while
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8
Q

What is the overall impact of technological change on employment

A

Employment rates are not falling

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9
Q

What is the impact on relative wages of technological change

A

The wage gap between college and high school educated workers is increasing

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10
Q

Examples of jobs done by humans that are now done by machines

A
  • Weaving
  • Typing
  • Unloading ships
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11
Q

What 3 ways can technology benefit society

A
  • It can make workers more productive
  • May create new jobs entirely
  • May increase demand through lower prices and new products
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12
Q

What are the two types of technological change that affect the labour market

A
  • Product demand shifts caused by the invention of new products
  • Changes in the production process caused by the invention of new processes or new inputs
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13
Q

What is the production function equation to model automation

A

Y= f(L,K)

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14
Q

What does this isoquant describe

A
  • All the combinations of K and L which produce the same level of output
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15
Q

What is the slope of an isoquant given by

A

Change in K/ Change in L

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16
Q

What is the absolute value of the slope of an isoquant called

A

The marginal rate of technical substitution

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17
Q

What does convec isoquants imply

A

Diminishing MRS between L and K

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18
Q

What is an isocost

A
  • A line connecting all points with equal costs
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19
Q

What is the slope of the isocost line

A

The ratio of input prices

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20
Q

What does this diagram show

A

Cost minimisation

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21
Q

What is the simplest way in which technological change can impact this model

Study These Flashcards
A
  • By changing factor prices
  • Eg tech makes labour cheaper
22
Q

What does the outcome on firms’ demand for labour and capital from technological change depend on

Study These Flashcards
A

Whethere the inputs are substitutes or complements

23
Q

Explain the impact of capital becoming cheaper

Study These Flashcards
A
  • Initial Cost minimisation
  • The isocost line gets steeper
  • Substitution effect, from A to B, B is tangential to isocost parallel to new one once shifted out, K increases and L falls
  • Scale effect from B to C, increasing output as q1 to q2- L increases and K increases
  • Overall becomes more capital intensive
24
Q

If the substitution effect wins following a fall in K prices what will happen to labour use

Study These Flashcards
A

It will decrease

25
What is held constant in both scale and substitution effects
sub- output scale- prices (same slope of isocost)
26
What does the size of the substitution effect depend on
The curvature of the isoquant
27
Explain the impact of adding just more computers here and why
- As right angled isoquants, this means they are perfect complements and thus only adding computers doesn't change output at all
28
For perfect complements what happens to factor proportions when there is a change in factor prices
There is no change
29
For perfect subsitutes, how does relative factor prices affect factor propotions
- If workers are cheap and robots expensive, firm just hires workers (corner solution on x axis) - If workers are expensive and robots are cheap, firm just hires robots ( corner solution on y axis)
30
What is the elasticity of substitution
The responsivenes of factor demand to changes in factor prices
31
Equation for elasticity of substitution
% change in K/L divided by % change in w/r
32
What is elasticity of substitution for perfect substitutes and perfect complements
- For perfect substitutes, infinity - For perfect complements, zero
33
What type of labour and machinery are seen to be complements
Skilled labour
34
What type of labour and machinery are seen to be substitutes
Unskilled labour
35
What is factor augmenting technological change equation
36
What is factor augmenting technological change
Technological change that increases the productivity of high or low skill workers
37
What could happen if a technology improved productivity of high skilled workers
- If Skilled and unskilled are complements, need less of them for same output - More likely they are substitutes thus firms will use more of them
38
What can technological change be thought of in terms of taks
An expansion in the set of tasks done by machines
39
In the task based approach what happens to humans
- They get displaced in certain tasks - Increases productivity and thus demand for labour in non automated tasks (productivity effect) - Creates new tasks for humans
40
What type of tasks do the workers who get displaced do
Routine/ codifiable tasks
41
What type of jobs have the highest proportion of routine tasks
Jobs in the middle of the skill and wage distribution
42
Why type of tasks do workers at the bottom of the skill distribution do
- Manual tasks
43
What type of tasks do people at the top of the skill distribution do
Abstract tasks
44
What does the tasks theory predict
Employment polarisation
45
What does the relative demand framework tell us
- Technological change has increased the demand for skilled relative to unskilled - Relative demand has outstripped supply, shifted out more
46
How does an increase in relative supply impact relative wages
Relative wages will fall
47
What does Katz and Murphy's model tell as about the demand for skilled relative to unskilled
It is increasing
48
What has happened to wage inequality due to technological change
Wage inequality has increased
49
What has happened at industry level
- Employment of production workers in manufacturing fell - Employment of non production workers rose due to increased demand within industry as they became more computerised
50
What does the time series evidence suggest about whether investment actually does increase employment of high skill workers
- Whilst there was a correlation in other industries between more tech investment and skilled workers, the IT sector found there was a causal think
51
What is the impact of job displacement like
There are large job losses even after 5 years

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