Symposium on Automation and Labor Markets
"Why Are There Still So Many Jobs? The History and Future of Workplace Automation," by David H. Autor
In this essay, I begin by identifying the reasons that automation has not wiped out a majority of jobs over the decades and centuries. Automation does indeed substitute for labor—as it is typically intended to do. However, automation also complements labor, raises output in ways that leads to higher demand for labor, and interacts with adjustments in labor supply. Journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity, raise earnings, and augment demand for labor. Changes in technology do alter the types of jobs available and what those jobs pay. In the last few decades, one noticeable change has been a "polarization" of the labor market, in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution, not to those in the middle; however, I also argue, this polarization and is unlikely to continue very far into future. The final section of this paper reflects on how recent and future advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. I argue that the interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem-solving skills, adaptability, and creativity.
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"The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?" by Joel Mokyr, Chris Vickers and Nicolas L. Ziebarth
Technology is widely considered the main source of economic progress, but it has also generated cultural anxiety throughout history. The developed world is now suffering from another bout of such angst. Anxieties over technology can take on several forms, and we focus on three of the most prominent concerns. First, there is the concern that technological progress will cause widespread substitution of machines for labor, which in turn could lead to technological unemployment and a further increase in inequality in the short run, even if the long-run effects are beneficial. Second, there has been anxiety over the moral implications of technological process for human welfare, broadly defined. While, during the Industrial Revolution, the worry was about the dehumanizing effects of work, in modern times, perhaps the greater fear is a world where the elimination of work itself is the source of dehumanization. A third concern cuts in the opposite direction, suggesting that the epoch of major technological progress is behind us. Understanding the history of technological anxiety provides perspective on whether this time is truly different. We consider the role of these three anxieties among economists, primarily focusing on the historical period from the late 18th to the early 20th century, and then compare the historical and current manifestations of these three concerns.
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"Is a Cambrian Explosion Coming for Robotics?" by Gill A. Pratt
About half a billion years ago, life on earth experienced a short period of very rapid diversification called the "Cambrian Explosion." Many theories have been proposed for the cause of the Cambrian Explosion, one of the most provocative being the evolution of vision, allowing animals to dramatically increase their ability to hunt and find mates. Today, technological developments on several fronts are fomenting a similar explosion in the diversification and applicability of robotics. Many of the base hardware technologies on which robots depend—particularly computing, data storage, and communications—have been improving at exponential growth rates. Two newly blossoming technologies—"Cloud Robotics" and "Deep Learning"—could leverage these base technologies in a virtuous cycle of explosive growth. I examine some key technologies contributing to the present excitement in the robotics field. As with other technological developments, there has been a significant uptick in concerns about the societal implication of robotics and artificial intelligence. Thus, I offer some thoughts about how robotics may affect the economy and some ways to address potential difficulties.
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Symposium on Pre-analysis Plans in Economics
"Promises and Perils of Pre-analysis Plans," by Benjamin A. Olken
The purpose of this paper is to help think through the advantages and costs of rigorous pre-specification of statistical analysis plans in economics. A pre-analysis plan pre-specifies in a precise way the analysis to be run before examining the data. A researcher can specify variables, data cleaning procedures, regression specifications, and so on. If the regressions are pre-specified in advance and researchers are required to report all the results they pre-specify, data-mining problems are greatly reduced. I begin by laying out the basics of what a statistical analysis plan actually contains so those researchers unfamiliar with it can better understand how it is done. In so doing, I have drawn both on standards used in clinical trials, which are clearly specified by the Food and Drug Administration, as well as my own practical experience from writing these plans in economics contexts. I then lay out some of the advantages of pre-specified analysis plans, both for the scientific community as a whole and also for the researcher. I also explore some of the limitations and costs of such plans. I then review a few pieces of evidence that suggest that, in many contexts, the benefits of using pre-specified analysis plans may not be as high as one might have expected initially. For the most part, I will focus on the relatively narrow issue of pre-analysis for randomized controlled trials.
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"Pre-analysis Plans Have Limited Upside, Especially Where Replications Are Feasible," by Lucas C. Coffman and Muriel Niederle
The social sciences—including economics—have long called for transparency in research to counter threats to producing robust and replicable results. In this paper, we discuss the pros and cons of three of the more prominent proposed approaches: pre-analysis plans, hypothesis registries, and replications. They have been primarily discussed for experimental research, both in the field including randomized control trials and the laboratory, so we focus on these areas. A pre-analysis plan is a credibly fixed plan of how a researcher will collect and analyze data, which is submitted before a project begins. Though pre-analysis plans have been lauded in the popular press and across the social sciences, we will argue that enthusiasm for pre-analysis plans should be tempered for several reasons. Hypothesis registries are a database of all projects attempted; the goal of this promising mechanism is to alleviate the "file drawer problem," which is that statistically significant results are more likely to be published, while other results are consigned to the researcher's "file drawer." Finally, we evaluate the efficacy of replications. We argue that even with modest amounts of researcher bias—either replication attempts bent on proving or disproving the published work, or poor replication attempts—replications correct even the most inaccurate beliefs within three to five replications. We offer practical proposals for how to increase the incentives for researchers to carry out replications.
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Symposium on Doing Business
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Symposium on Doing Business
"Law, Regulation, and the Business Climate: The Nature and Influence of the World Bank Doing Business Project," by Timothy Besley
The importance of a well-functioning legal and regulatory system in creating an effective market economy is now widely accepted. One flagship project that tries to measure the environment in which businesses operate in countries across the world is the World Bank's Doing Business project, which was launched in 2002. This project gathers quantitative data to compare regulations faced by small and medium-size enterprises across economies and over time. The centerpiece of the project is the annual Doing Business report. It was first published in 2003 with five sets of indicators for 133 economies, and currently includes 11 sets of indicators for 189 economies. The report includes a table that ranks each country in the world according to its scores across the indicators. The Doing Business project has become a major resource for academics, journalists, and policymakers. The project also enjoys a high public profile with close to ten million hits on its website each year. With such interest, it's no surprise that the Doing Business report has come under intense scrutiny. In 2012, following discussions by its board, the World Bank commissioned an independent review panel to evaluate the project, on which I served as a member. In this paper, I first describe how the Doing Business project works and illustrate with some of the key findings of the 2015 report. Next, I address what is valuable about the project, the criticisms of it, and some wider political economy issues illustrated by the report.
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"How Business Is Done in the Developing World: Deals versus Rules," Mary Hallward-Driemeier and Lant Pritchett
What happens in the developing world when stringent regulations characterizing the investment climate meet weak government willingness or capability to enforce those regulations? How is business actually done? The Doing Business project surveys experts concerning the legally required time and costs of regulatory compliance for various aspects of private enterprise—starting a firm, dealing with construction permits, trading across borders, paying taxes, getting credit, enforcing contracts, and so on—around the world. The World Bank's firm-level Enterprise Surveys around the world ask managers at a wide array of firms about their business, including questions about how long it took to go through various processes like obtaining an operating license or a construction permit, or bringing in imports. This paper compares the results of three broadly comparable indicators from the Doing Business and Enterprise Surveys. Overall, we find that the estimate of legally required time for firms to complete a certain legal and regulatory process provided by the Doing Business survey does not summarize even modestly well the experience of firms as reported by the Enterprise Surveys. When strict de jure regulation and high rates of taxation meet weak governmental capabilities for implementation and enforcement, we argue that researchers and policymakers should stop thinking about regulations as creating "rules" to be followed, but rather as creating a space in which "deals" of various kinds are possible.
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Articles
"The Microeconomic Dimensions of the Eurozone Crisis and Why European Politics Cannot Solve Them," by Christian Thimann
The importance of a well-functioning legal and regulatory system in creating an effective market economy is now widely accepted. One flagship project that tries to measure the environment in which businesses operate in countries across the world is the World Bank's Doing Business project, which was launched in 2002. This project gathers quantitative data to compare regulations faced by small and medium-size enterprises across economies and over time. The centerpiece of the project is the annual Doing Business report. It was first published in 2003 with five sets of indicators for 133 economies, and currently includes 11 sets of indicators for 189 economies. The report includes a table that ranks each country in the world according to its scores across the indicators. The Doing Business project has become a major resource for academics, journalists, and policymakers. The project also enjoys a high public profile with close to ten million hits on its website each year. With such interest, it's no surprise that the Doing Business report has come under intense scrutiny. In 2012, following discussions by its board, the World Bank commissioned an independent review panel to evaluate the project, on which I served as a member. In this paper, I first describe how the Doing Business project works and illustrate with some of the key findings of the 2015 report. Next, I address what is valuable about the project, the criticisms of it, and some wider political economy issues illustrated by the report.
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"How Business Is Done in the Developing World: Deals versus Rules," Mary Hallward-Driemeier and Lant Pritchett
What happens in the developing world when stringent regulations characterizing the investment climate meet weak government willingness or capability to enforce those regulations? How is business actually done? The Doing Business project surveys experts concerning the legally required time and costs of regulatory compliance for various aspects of private enterprise—starting a firm, dealing with construction permits, trading across borders, paying taxes, getting credit, enforcing contracts, and so on—around the world. The World Bank's firm-level Enterprise Surveys around the world ask managers at a wide array of firms about their business, including questions about how long it took to go through various processes like obtaining an operating license or a construction permit, or bringing in imports. This paper compares the results of three broadly comparable indicators from the Doing Business and Enterprise Surveys. Overall, we find that the estimate of legally required time for firms to complete a certain legal and regulatory process provided by the Doing Business survey does not summarize even modestly well the experience of firms as reported by the Enterprise Surveys. When strict de jure regulation and high rates of taxation meet weak governmental capabilities for implementation and enforcement, we argue that researchers and policymakers should stop thinking about regulations as creating "rules" to be followed, but rather as creating a space in which "deals" of various kinds are possible.
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Articles
"The Microeconomic Dimensions of the Eurozone Crisis and Why European Politics Cannot Solve Them," by Christian Thimann
The academic and policy debate about the crisis in Europe's single currency area is usually dominated by macroeconomic and public sector considerations. The microeconomic dimensions of the crisis and the private sector issues typically get much less attention. However, it is the private sector hiring choices of domestic and foreign firms that will ultimately be decisive. This paper argues there are two main problems holding back private sector employment creation in the stressed eurozone countries. First, there is a persistent competitiveness problem in some of the eurozone countries due to high labor costs relative to underlying productivity. Second, widespread structural barriers make job creation in these countries far more arduous than in many other advanced economies, and even more arduous than in some key emerging economies and formerly planned economies. Structural barriers to private sector development are particularly widespread in the areas of labor market functioning, goods market functioning, and government regulation. Evidence from the World Economic Forum's Global Competitiveness Index and the World Bank's Doing Business dataset confirms the immense size and persistence of these barriers, despite improvements in some countries in recent years. The paper also presents a novel explanation for the difficulty of structural reforms in the eurozone, tracing the challenge to the current trend to "Europeanize" and "politicize" economic reform discussions in national policy fields where "Europe" is not a legitimate actor and the European political level is not effective.
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"E-Books: A Tale of Digital Disruption," by Richard J. Gilbert
E-book sales surged after Amazon introduced the Kindle e-reader at the end of 2007 and accounted for about one quarter of all trade book sales by the end of 2013. Amazon's aggressive (low) pricing of e-books led to allegations that e-books were bankrupting brick and mortar book booksellers. Amazon's commanding position as a bookseller also raises concerns about monopoly power, and publishers are concerned about Amazon's power to displace them in the book value chain. I find little evidence that e-books are primarily responsible for the decline of independent booksellers. I also conclude that entry barriers are not sufficient to allow Amazon to set monopoly prices. Publishers are at risk from Amazon's monopsony (buyer) power and so sought "agency" pricing in an effort to raise the price of ebooks, promote retail competition, and reduce Amazon's influence as an e-retailer. (In the agency pricing model, the publisher specifies the retail price with a commission for the retailer. In a traditional, "wholesale" pricing model, publishers sell a book to retailers at a wholesale price and retailers set the retail price.) Although agency pricing was challenged by the Department of Justice, it may yet prevail in some form as an equilibrium pricing model for e-book sales.
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"The Indian Gaming Regulatory Act and Its Effects on American Indian Economic Development," by Randall K. Q. Akee, Katherine A. Spilde and Jonathan B. Taylor
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"The Indian Gaming Regulatory Act and Its Effects on American Indian Economic Development," by Randall K. Q. Akee, Katherine A. Spilde and Jonathan B. Taylor
The Indian Gaming Regulatory Act (IGRA), passed by the US Congress in 1988, was a watershed in the history of policymaking directed toward reservation-resident American Indians. IGRA set the stage for tribal government-owned gaming facilities. It also shaped how this new industry would develop and how tribal governments would invest gaming revenues. Since then, Indian gaming has approached commercial, state-licensed gaming in total revenues. Gaming operations have had a far-reaching and transformative effect on American Indian reservations and their economies. Specifically, Indian gaming has allowed marked improvements in several important dimensions of reservation life. For the first time, some tribal governments have moved to fiscal independence. Native nations have invested gaming revenues in their economies and societies, often with dramatic effect.
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"Recommendations for Further Reading," by Timothy Taylor
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Editorial Note: Correction to Jeffrey B. Liebman's "Understanding the Increase in Disability Insurance Benefit Receipt in the United States"
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