In this age of technology, computers have been accepted as a powerful tool for maximizing productivity in offices and other workplaces around the world. While computers have become the emblem of the Information Age and the increased role technology has had in labor productivity, robots have largely remained only an object of science fiction fascination in the eyes of many, still just a fantastic, far-away threat to human safety. However, robots are already playing a major role in global productivity and are influential in shaping many economies around the world.
Industrial robots (which are defined as machines that can be programmed to perform physical, production-related tasks without human input) have seen their prices reduced by almost 80% from the period of 1993 to 2007. In countries such as Denmark, Germany, and Italy (which have many producers of transportation equipment, chemicals, and metals) the ratio of robots to hours worked has increased by almost 150%. By matching current data on tasks performed by robots with those of U.S. workers in 1980 (before robots were in use), a conservative estimate of 0.37 percentage points was the calculated contribution of robots to GDP. This figure is on-par with the estimated contributions to labor productivity of railroads in the nineteenth century and highways in the twentieth century.
As robots become increasingly cheaper to produce and acquire while their productivity continues to also rise, human workers become a much less efficient investment for businesses around the world. Many industries (specifically those related to production and manufacturing) have already experienced the wide-scale takeover of robots and seen significant job loss for human employees. However, as technology improves, perhaps more industries will fall victim to automation as more tasks can be completed more effectively by robots than humans. While many consider the gains from technology to have significantly slowed down in recent years, the appeal of equal productivity at cheaper costs by means of replacing human workers with robots may become increasingly appealing to many businesses. Perhaps the real threat of robots in the future is not to human health and safety by means of an AI revolution, but rather to employment by simply being better than humans at their jobs.
http://www.voxeu.org/article/robots-productivity-and-jobs
6 Comments
Whether robots improve MFP rather than just labor productivity is an interesting question. Most of the cost of improved robots gets priced in to measures of capital so we do not really see MFP boosts. However, the effect on labor productivity (output per labor hour) surely receives a boost.
I think it should be really interesting to see the effect of automation on the natural employment rate. I’ve read about a scenario before where we may have to one day accept an economy where the natural unemployment is 20% and a subsistence wage may have to be instituted.
Let’s think in terms of an overall economy: an improvement in labor productivity leads to lower prices and higher consumption. That then means you need to know the price elasticity of demand. If demand is elastic, you can actually see employment rise. However, for manufactured goods the long-run trend is for productivity to increase faster that demand. So total manufacturing employment falls. Robots are only the most recent part of that story.
In contrast the demand for services is much more tied to income (and age) while demand is price inelastic. So what you get is a shift in the structure of the economy from goods to services. There’s no reason to think it will lead to either unemployment or to booming wages – the transition takes decades, and we have not seen unemployment stay high for that long, at least in the US.
Let’s think in terms of an overall economy: an improvement in labor productivity leads to lower prices and higher consumption. That then means you need to know the price elasticity of demand. If demand is elastic, you can actually see employment rise. However, for manufactured goods the long-run trend is for productivity to increase faster that demand. So total manufacturing employment falls. Robots are only the most recent part of that story.
In contrast the demand for services is much more tied to income (and age) while demand is price inelastic. So what you get is a shift in the structure of the economy from goods to services. There’s no reason to think it will lead to either unemployment or to booming wages – the transition takes decades, and we have not seen unemployment stay high for that long, at least in the US.
This global increasing in use of robots is interesting, as it not only fuels unemployment fears but the classic fear of artificial intelligence. Elon Musk has said publicly that he worries down the road of giving too much responsibility to automated machines.
Remembering Gordin’s paper from the beginning of the term, I’m compelled to ask whether or not the more robust and pervasive use of robots will affect productivity. Or, will these improvements simply adjust how much time is spent pursuing leisure.
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