TECHNOLOGY AT WORK

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82 Citi GPS: Global Perspectives & Solutions February 2015 Skill-biased technological change may also have induced skilled workers to work more. According to research by Peter Kuhn and Fernando Lozano, for example, the rise in hours worked by highly-educated men between 1980 and 2000 is primarily driven by the premium associated with working longer hours, incentivising especially skilled workers to increase their labour supply. 132 To be sure, the growing leisure among low-skilled workers is not all good news, as some of it may be involuntary, caused by unemployment. 133 But information technology is undoubtedly making leisure more attractive for ordinary people. 132 Kuhn and Lozano (2008) 133 Aguiar and Hurst (2007). © 2015 Citigroup
February 2015 Citi GPS: Global Perspectives & Solutions 83 The digital age may be more disruptive than previous revolutions as it is happening faster and is fundamentally changing the way we live and work Skilled workers have benefited from the digital age as producers while unskilled workers have benefited as consumers When is this happening? Soon 6. Adapting to Technological Change: Pathways and Strategies “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets… [This process] incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of creative destruction is the essential fact about capitalism.” 134 Technological change is at the very heart of the creative destruction described by Joseph Schumpeter. While revolutionary technologies of the past have created enormous wealth, they have also been a source of disruption. The digital age may cause more upheaval than previous technological revolutions as it is happening even faster and is fundamentally changing the way we live and work. Yet technology is not destiny. With the right understanding of associated challenges, and the right strategies, the digital age may be an inclusive one. To be sure, there are profound economic risks associated with the rapid technological change that is currently taking place. Surging inequality is not only dividing societies, it is also threatening macroeconomic stability. As digital technologies do not require much capital investment, and mainly benefit those with a lower propensity to spend — leading to reduced investment and consumption — the digital age could also become a period of secular stagnation. While the digital age has so far mainly benefited skilled workers as producers, it has also benefited unskilled workers as consumers, making their leisure more interesting and self-fulfilling. A surge in productivity, as organisational structures are redesigned to accommodate new technologies, could make up for some of the fall in investment and consumption, and together with policies designed to boost aggregate demand and reduce inequality, growth rates could rebound and even surge. In this chapter we will emphasise the need for countries to adapt to these trends in an inclusive manner. To achieve greater equality, and avoid the threat of secular stagnation, governments have to understand the direction and pace of technological change and plan for the long term. Planning for the Long Term In considering future technological development, one question hangs over our predictions: when? Specifically, what is the timeline over which anticipated impacts of technological change will unfold? The most concise answer to this question is simply: soon. The technologies we discuss, from autonomous vehicles to algorithmic sales assistants, are largely already available within research labs: any uncertainty is due less to the surrounding rates of technological development and more to questions of adoption. Nonetheless, this uncertainty is still considerable, due to two variable and regionally-dependent influences. As a first concern, adoption of labour-saving inventions will be influenced by the availability of cheap labour. Secondly, technological adoption may be slowed by regulatory concerns and political activism. Protests from traditional taxi companies, along with public concern, has been at the root of resistance to the app-based company Uber, which has now received cease-and-desist orders in Brisbane, Frankfurt and Taiwan, and 134 Schumpeter (1942, p. 83) © 2015 Citigroup
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TECHNOLOGY AT WORK

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