Policy Responses to Technological Change in the Workplace

Abstract

The rise of new technologies has been a defining feature of advanced capitalist countries over the last decades, reigniting concerns about the future of work, rising inequality, and technological unemployment. While there is little doubt that rapid technological progress has far-reaching economic, social, and political consequences, little is known about viable and effective policies governments can implement to assist workers and communities in adjusting to a fast-changing economic landscape and rising labor market insecurity. This paper focuses on the ability of public policies to moderate technology-induced labor market vulnerability and its well-documented political downstream consequences. First, I suggest to theoretically classify policy responses according to their intended goal into a three-fold typology, distinguishing between investment, steering, and compensation policies. After that, I provide a detailed discussion of the current state of the empirical literature on how such policy responses affect workers coping with technological change. In the last section, I discuss to what extent these findings can guide the adoption of policies to help workers adapt to technological change and point out potential avenues for future research.

Broadening the Gains from Generative AI

“…7 Adão, Beraja, and Pandalai-Nayar (2024) show that when skill specificity is stronger, as in the case of information and communication technology (ICT), adjustment of labor markets is driven more by the gradual entry of younger generations than by reallocation of older incumbent workers. leaving the workforce and fewer younger workers entering such jobs (Bürgisser 2023). The advent of AI could aggravate adjustment costs if it entails broader substitution of nonroutine tasks (Acemoglu 2021) and affects younger workers for whom early retirement is not an option.…”