Polanyi s Paradox and the Shape of Employment Growth

Transcription

1 Polanyi s Paradox and the Shape of Employment Growth David Autor, MIT and NBER Second Machine Age Conference September 10, 2014

2 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

3 Changes in Real Wage Levels in U.S. by Education and Sex, Changes in real wage levels of full-time U.S. workers by sex and education, Real weekly earnings relative to 1963 (men) A MEN Real weekly earnings relative to 1963 (women) B WOMEN Some college > Bachelor's degree Bachelor's degree High school dropout High school graduate Autor, 2014

4 Changes in U.S. Male Emp/Pop and Real Wage Levels (Ages 25-39) 10 Percentage Point Change in Male Employment to Population Rates W HSD W HSG O HSD O HSG B HSG B HSD W SMC B SMC O SMC B CLG W CLG B GTC O CLG W GTC O GTC Percentage Change in Male Hourly Wages White Other Non White Black Fitted Values Autor and Wasserman 2014

5 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

6 Chicago Economists Poll, February 21, % Q: Advancing Automation has Not Historically Reduced Employment in the United States... 63% 60% 50% 40% 30% 25% 20% 10% 0% 8% 4% 0% Strongly Disagree Disagree Uncertain Agree Strongly Agree

7 Chicago Economists Poll, February 21, % 45% Q: Information Technology and Automation Are a Central Reason Why Median Wages Have Been Stagnant in the US Over the Past Decade, Despite Rising Productivity 43% 40% 35% 30% 25% 20% 15% 10% 24% 30% 5% 0% 4% Disagree Strongly Disagree Uncertain Agree Strongly Agree 0%

8 The Productivity Problem of : President Johnson establishes Blue- Ribbon National Commission on Technology, Automation, and Economic Progress The Milwaukee-Matic industrial machining tool, 1963

9 A Venerable History of Automation Anxiety 1966: Ad- Hoc Committee on the Triple Revolution Members: Jacob Heilbroner, Linus Pauling, Gunnar Myrdal An open letter to President Johnson The traditional link between jobs and incomes is being broken The economy of abundance can sustain all citizens in comfort and economic security whether or not they engage in what is commonly reckoned as work. U.S. Dept. of the Interior, 1974 Leisure, thought by many to be the epitome of paradise, may well become the most perplexing problem of the future. And of course, the Luddites ( )

10 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

11 What Polanyi Said Michael Polanyi, The Tacit Dimension, 1966 We can know more than we can tell... The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar; the knowledge I have of my own body differs altogether from the knowledge of its physiology. Two implications of Polanyi s Paradox One technical, one economic 1. (Technical) Cannot automate what we don t explicitly understand 2. (Economic) Tasks that are not substituted by machines are typically complemented by machines

12 Employment Polarization in the United States, Changes in Employment by Occupation, x Log Change Personal Care Production Operators/Laborers Protective Service Food/Cleaning Service Sales Office/Admin Technicians Managers Professionals

13 Employment Polarization in Sixteen European Union Countries, % 12% 9% 6% 3% 0% -3% -6% -9% -12% -15% -18% Ireland( Belgium( Spain( UK( Luxembourg( Greece( Finland( Italy( Austria( Denmark( Sweden( France( Norway( Netherlands( Germany( Portugal( -4.9% -6.7% -7.6% -8.6% -8.5% -10.9% -10.8% -10.7% -10.6% -10.6% -10.4% -10.3% -9.6% -12.1% -12.0% -14.9% Low$Paying$ Middle$Paying$ High$Paying$ Goos, Manning and Salomons, 2014

14 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

15 Percent Changes in U.S. Mean Weekly Wages, Full-Time, Full-Year Workers by Major Occupation, Changes in Occupational Mean Weekly Wages by Occupation Full Time, Full Year Workers 100 x Log Change in Mean Weekly Wage Personal Care Production Operators/Laborers Protective Service Food/Cleaning Service Sales Office/Admin Technicians Managers Professionals

16 Smoothed Changes in Mean Wages by Occ Skill Percentile among Full-Time, Full-Year Workers, Smoothed Wage Changes by Skill Percentile Among All Workers 100 x Log Change in Mean FTFY Wage Skill Percentile (Ranked by Occupation s 1979 Mean Log Wage)

17 What Polanyi Said Two implications of Polanyi s Paradox 1. (Technical) Cannot automate what we don t explicitly understand 2. (Economic) Tasks that are not substituted by machines are typically complemented by machines

18 Factors that Shape Impact of Automation on Workers Earnings 1. Substitution versus complementarity Workers benewit if their job tasks are complemented, but not if tasks are substituted. Great time to be a CADD operator, bad time to be a paper and pencil draftsperson. 2. Elasticity of [inal demand Can either dampen or amplify the gains from automation. Think of agriculture versus health care. 3. Labor supply elasticity Can mitigate wage gains. Why wages don t rise rapidly in food service and hair cutting 4. Relevance: Abstract task- intensive versus Manual task- intensive jobs

19 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

20 Smoothed Changes in Employment Shares by Occ Skill Pct, Full-Time, Full-Year Workers, Smoothed Employment Changes by Skill Percentile Among All Workers 100 x Change in Employment Share Skill Percentile (Ranked by Occupation s 1979 Mean Log Wage)

21 Private Fixed Investment in Information Processing Equipment and Software as Pct of GDP, % 4.5% 4.0% 3.5% 3.0% 2.5% % 1.5% 1.0% 0.5% 0.0% Federal Reserve Bank of St. Louis: FRED Database

22 China Share of World Manufacturing Exports and China Import Penetration in U.S. Manufacturing, share of world exports (%) import penetration ratio (%) Year China share of world manufacturing exports China import penetration in US manufacturing 0 Figure I Acemoglu, Autor, Dorn, Hanson and Price, 2014

23 U.S. Import Penetration by China (left), and Share of US Working-Age Pop in Manufacturing (right), Import penetration Manufacturing emp/pop Year China import penetration ratio Manufacturing employment/population Autor, Dorn and Hanson, 2014

24 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

25 The Future of Polanyi s Paradox Computerization has progressed Driving vehicles Parsing legal documents Performing agricultural Wield labor. Polanyi s paradox remains relevant central Explain what has not yet been accomplished Illuminates the contours of the technological frontier Overcoming Polanyi s Paradox 1. Environmental Control: Bows to Polanyi s paradox 2. Machine Learning Attempts an end- run around it

26 Environmental Control -- Kiva Systems Order Fulfillment: Robotic Drive Units Move Shelves to Workers for Picking

27 Kiva-Worker Interaction: Guided by Laser Pointer, Worker Picks Items from Shelves for Shipping

28 Machine learning Machine Learning Inductive reasoning versus procedural programming Problem: Cannot program a machine to simulate a non- routine task by following a scripted procedure Solution: Program a machine to master the task autonomously by studying successful examples of the task being carried out by others Recipe Databases of ground truth Curated examples of labeled objects Process of exposure, training, and reinforcement Algorithm infers how to accomplish tasks that are hard to codify with explicit procedures. Examples Cat problem Chair problem

29 Images of Cats Successfully Recognized by Google X Labs Team, Using a Neural Network of 16,000 Processors Le, Ranzato, Moga, Devin, Chen, Corrado, Dean and Ng, 2012

30 What is a Chair? Grabner, Gall and Gool, 2001

31 Brittleness of Machine Learning Watson s Jeopardy! Victory in 2011 Category U.S. Cities Question Its largest airport was named for a World War II hero Its second largest was name for a World War II battle Correct answer Chicago (Midway airport) Watson s answer Toronto (in Canada, 2 nd largest airport is Waterloo)

32 Also Possible to Underestimate Rate of Progress Popular Mechanics, March 1949 Where a calculator on the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and perhaps weigh 1.5 tons.

33 Outline Polanyi s Paradox 1. Why people are worried 2. Automation anxiety: A venerable history 3. Polanyi s paradox 4. Employment polarization vs. wage polarization 5. The puzzle of the 2000s 6. The future of Polanyi s paradox 7. Conclusion

34 Conclusion 1. Skill demands rising 2. Underappreciated complementarities Farmers: 40% of employment in 1900 to 2% in Hard to see where new jobs are coming from Health care, Winance, information technology, consumer electronics, hospitality, leisure and entertainment But adjustment is painful 3. Polarization will not continue inde[initely 4. Computerization is probably not the main employment issue over the last decade

35 The Challenge: Scarcity or Abundance? Heilbroner s concern in 64 As machines continue to invade society, duplicating greater and greater numbers of social tasks, it is human labor itself that is gradually rendered redundant. Herbert Simon s response to Heilbroner in 66 The world s problems in this generation and the next are problems of scarcity, not of intolerable abundance. The bogey-man of automation consumes worrying capacity that should be saved for real problems like population, poverty, the Bomb, and our own neuroses.