History oftechnological changeandemployment:TheLudditemovementTechnischeUniversiteitTUEindhoveneUniversityofTechnology10/21/2013PAGE5EcononomicsofInnovation2013
History of technological change and employment: The Luddite movement Econonomics of Innovation 2013 10/21/2013 PAGE 5
Alternative views ontechnologicalchangeandemploymentEffectsofinnovationand diffusionoftechnologiesaffectlabormarkets,levelofemployment,wages,andoccupationalstructureInnovationand technological change considered as havingpositiveeffectsonthe nationaleconomy,asitsustainsdemandforworkersInknowledgeeconomy,highskilledworkersareconsideredascompatibletohightechnologycapitalandknowledgestock (skills based technological change),but low skilledworkers will loose (loweremploymentand lowerwages)Technische UniversiteitTUEindhovenUniversityofTechnologyPAGE6EcononomicsofInnovation201310/21/2013
Alternative views on technological change and employment • Effects of innovation and diffusion of technologies affect labor markets, level of employment, wages, and occupational structure • Innovation and technological change considered as having positive effects on the national economy, as it sustains demand for workers • In knowledge economy, high skilled workers are considered as compatible to high technology capital and knowledge stock (skills based technological change), but low skilled workers will loose (lower employment and lower wages) Econonomics of Innovation 2013 10/21/2013 PAGE 6
WHEREASHistory: Luddite movement andREROERNERAMESIn diferentParts of the CountryLuddite FallacyTO GIVE NOTICE.BREAKING THEFRAMES,50GUINEASLuddite movement: in early 1gth century>REW.ARDSmashingnewequipmentintextileindustryComplain:Destructionof skilledjobthroughtheintroduction of newtechnologyLudditefallacy:Misconception,withincreasedproductivity employers would continue to produce aconstant outputwithfewerworkers,ratherthanexpandingtheiroutputfromagivenworkforceTechnische UniversiteitTUEindhovenUniversityofTechnologyPAGE710/21/2013EcononomicsofInnovation2013
History: Luddite movement and Luddite Fallacy • Luddite movement: in early 19th century > Smashing new equipment in textile industry • Complain: Destruction of skilled job through the introduction of new technology • Luddite fallacy: Misconception, with increased productivity employers would continue to produce a constant output with fewer workers, rather than expanding their output from a given workforce Econonomics of Innovation 2013 10/21/2013 PAGE 7
LudditeviewStill relevantforsomegroupsofworkersKeyquestion:whetherornotskillsarebeingmaderedundant(e.g.newmachinery offering cheapsubstitutefor skilled workor skills are enhanced andindemandastheyarecomplementarytonewmachinery)Example:NedCarBorn?TechnischeUniversiteitTUEindhoveneUniversity ofTechnologyPAGE810/21/2013EcononomicsofInnovation2013
Luddite view • Still relevant for some groups of workers • Key question: whether or not skills are being made redundant (e.g. new machinery offering cheap substitute for skilled work or skills are enhanced and in demand as they are complementary to new machinery) • Example: NedCar Born? Econonomics of Innovation 2013 10/21/2013 PAGE 8
Factor-biased technological changeTechnische UniversiteitTUEindhoveneUniversity of Technology10/21/2013PAGE9EcononomicsofInnovation2013
Factor-biased technological change Econonomics of Innovation 2013 10/21/2013 PAGE 9