Traditional labor movements are affected by automation in various ways. Labour unions have incentives to protect incumbent workers who are negatively affected by automation, which can neutralize the positive effects of automation on new hires of junior and unskilled production workers. Automation displaces employment and reduces labor’s share of value-added in the industries where it originates, but these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand. Automation may induce productivity gains, increase market demand, and the scale of production, which can in turn increase labor demand. The joint impact of the […]
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