Director David Autor talks “tech, trade & job markets” in new interview

Federal Reserve Bank of Minneapolis; September 7, 2016

The 21st cen­tury has been hard on American labor. Unemployment soared from a low of 4 per­cent in 2000 to a peak of 10 per­cent in October 2009. While the unem­ploy­ment rate has since recov­ered to its cur­rent 5 per­cent, labor force par­tic­i­pa­tion and pro­duc­tiv­ity have declined, and wage growth is feeble.

Many blame America’s labor woes (which began well before the Great Recession) on China’s surg­ing exports and rapid tech­no­log­i­cal change that seem­ingly replaced humans with com­put­ers and robots. But econ­o­mists have long insisted that trade lib­er­al­iza­tion and tech­no­log­i­cal inno­va­tion were pos­i­tive over­all eco­nomic forces, and that dis­rup­tive costs to some work­ers were small and short-lived rel­a­tive to total ben­e­fits for the econ­omy as a whole.

David Autor of MIT has shone a bright light on the often-downplayed costs. He and co-authors care­fully ana­lyzed the impact of tech­no­log­i­cal change and import sub­sti­tu­tion on U.S. labor and found that the dis­rup­tive costs are much larger and longer-lived than pre­vi­ously recognized.