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Table of contents

Introduction………………………………………………………………………………3

Does More Technology Create

Unemployment? ...................................................

.........4

Literature review……………………………………………………………………….….6

a. Japan case………………………………………………………………………….6

b. United states case……………………………………………….…………………7

c. Israel case………………………………………………………….……………….7

Examples of replacing human with machine………………………………………….……7

a. Computers…………………………………….……………………………………8

b. Internet…………………………………………………...…………………………9

c. Phones……… ……………………………………………………………….9

d. Television………………………………………………………………………….10

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Conclusions and analytical

thinking.........................................…………………………..10

Work cited ………………………………………..………………………………………13

Technology vs. Unemployment

Introduction

Does technology create or destroy employment is one of the

big questions that troubles people today. First, it is largely

technology that has the potential of providing the society with

the luxury to focus more on earth, and, second, technology is

often cited as the ultimate source of economic growth and

consequently job growth. What about the idea then that

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technological innovation is the continuous source of growth, and

would technology adapt itself to provide this growth in the

coming days? Technological innovations are invariably associated

with the changes in the nature of work and thus in the

composition of employment by industry and occupation. New

technologies usually give rise to fears that they will displace

labor and create unemployment. During the great automation scare

of the 1960s, the American government was sufficiently worried

that automated industries would eliminate jobs that it

established the National Commission on Technology, Automation,

and Economic Progress to investigate the impacts of automation.

Advocates of technology currently argue that it will create jobs,

on the basis of what has happened in the past, substantive

positive and negative effect on the overall level of jobs or on

the unemployment rate. Rather, technology advancements will

impact the rates of pay and the quality of jobs. Claims that

advanced technologies produce or destroy jobs miss the point on

how the economy adjusts to technological change. In the long-run,

technology affects living standards and quality of work, not

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quantity of work. If higher living standards induce people to

take more leisure, the amount of work will reduce. If the higher

real wage that technology creates induces people to want to work

more, employment and hours worked may rise. What differentiates

successful from unsuccessful societies is not the rate of

employment but GDP per capita or real wages. Employment is quite

high and unemployment rare in some developing countries that have

very low living standards.

Does More Technology Create Unemployment?

Technological change in a given sector affects the demand

for labor in that sector in three ways. First, since the new

technology almost always lowers the amount of labor that is

required in the production of products, it will reduce the demand

for labor at given output levels. If the output did not change,

this would lower employment in the affected sector. This

displacement impact of technology is what generates fears that

new technology will destroy jobs and create technological mass

unemployment. Second, however, new technology also increases the

demand for products. Productivity-induced reductions in the cost

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of goods and services and ultimately prices generate greater

demand for the product and thus greater demand for labor to

produce it. The massive decline in the price of computing power

that results from technological improvements has spurred huge

increases in the sales of computers. Whether the induced increase

in output and demand for labor overpowers the displacement of

labor due to the increased depends on the elasticity of the

demand for the product. When the prices reduce, consumers

increase their purchases massively for products with a high

elasticity of demand but increase purchases only modestly for

products with a low elasticity of demand. On the assumption that

elasticity of demand are greater for new products than the

existing products, we expect that technological changes that

create new products are more likely to increase demand for the

labor in the relevant sector than technological changes that

reduce the price of existing products (Arestis, 411).

For the past many fifty years, the displacement effect of

technological advancements has exceeded the job-creation effect

of production expansion. Employment reduced in agriculture and

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manufacturing, where technological changes is most rapid, and

shifted toward services, where technological change is modest.

Within manufacturing, employment has shifted to the more

technologically advanced sectors, and from less technologically

advanced to more technologically advanced goods, but it has been

sufficient to counterbalance declining employment elsewhere in

manufacturing. Still, there has been no adverse effect on the

overall employment or the quality of jobs. In the United States,

the wages of workers in sectors that have rapid production

advances tends to rise relative to wages of comparable workers in

other sectors (Rosenberg, 214).

Since improved technology is likely to become part of the

way many industries operate- a general purpose technology that

affects everything, analogous to electricity or information

technology- rather than a technology that creates a new industry,

it will take a long time to affect labor demand throughout the

economy. Given the dominance of the displacement effect,

successful technology- initiated improvements in production are

likely to raise the country’s manufacturing output while reducing

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employment in manufacturing or at least without creating many new

jobs in manufacturing. Technology advancements should be seen as

a productivity enhancing phenomenon that permeates the economy,

not as a job-creating. Its effect on employment will be indirect

as productivity-induced higher real wages and living standards

generate additional consumer demand for all sorts of products and

services contributing to employment growth (Arestis, 413).

The third way new technology affects demand for labor is in

its use of particular factories of production. New technologies

invariably use a different mix of factors than older

technologies. During the development of new technology, firms are

likely to have high demands for the scientists, engineers, and

technicians who have to build and integrate the new ideas into

processes and products. In addition, there is a need for

supporting labor services, which creates employment opportunities

for other people. For example, the introduction of robots will

create a robot support industry to install, service, and monitor

performance, to say nothing of design and manufacture. Jobs are

eliminated in those industries that benefit from robots but are

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created in the robot support companies. Even the most high-tech

industry hires many people in sales, clerical and office work,

and employs blue collar workers and service workers of different

types. As the technology matures, demands are likely to shift

toward workers with lesser skills. In the past few decades, new

technologies have been skilled-labor-using, which has contributed

to the increased earnings of educated workers relative to less

educated workers, despite an increase in the relative supply of

the educated (Allstetter et al, 143-144).

Literature review (what happened in other countries and what they

did)

a. Japan Case

The recession of the 1990s and early 2000s seemed to be of a

different order from those of the past. Unemployment in Japan

reached 5.4 percent in 2002, and it was the highest for 50 years.

At the start of the recession, many Japanese firms tried to avoid

compulsory redundancies through redistributing resources, early

retirements and freezing recruitment. Major companies also lay

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off temporary workers typically comprising of about ten percent

of the staff. Then came the first announcements of redundancies

in the core workforce. Nissan, the Japan’s second largest care

manufacturers, announced heavy losses and started a restructuring

involving 5000 fewer staff. Te most dramatic part of the

announcement was the closure of Zama plant employing about 2500

workers. These workers were laid off because the factory was

capable of making many cars using the most advanced technology,

including extensive employment of robots (Samanta, 33).

b. United States Case

The chemical and mechanical revolution in America agriculture

over the past 10 decades put several farm workers out of

employment, transforming America from an agricultural society to

industrial nation. In 1850, about 60 percent of employees worked

in agriculture. Today, the number has reduced whereby only 2.7

percent of the workers are engaged in farming while millions of

people are poor. Despite the workers displacement, technology has

made America the leading food producer in the globe.

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c. Israel Case

New generations of computer driven robots will for replace

humans from performing tasks on land in Israel and potentially

transform into an automatic outdoor factory. In Israel, farmers

are using advanced robots in farming. In order to reduce the

risks associated with using Palestinians as workers in the farms,

the institute for agricultural engineering came up with

mechanical farm laborers/robots. The Israel people are

experimenting with a robotic melon picker which uses sensors in

determining whether crops are right to pick which has put many

Palestinian workers out work, especially during harvesting (Nof,

1143).

Examples of replacing human with machine

a. Computers

Since the beginning of the introduction of computers, many

people have feared that they will displace employees, and

information technology is no exception. However, we do not have

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solid evidence that the introduction and use of computers have

enhanced massive unemployment- in fact; overall more jobs have

been created by computers that have been displaced by them. In

the 1980s, thousands of employees of factories were made

redundant by the use of robots in factories making everything

from cars to biscuits. In 1990s, many of clerical and white-

collar employees have seen their jobs disappear with the

introduction of company databases, desktop publishing,

computerized accounting systems, building societies, automation

in banks, and firms of all kinds, small and large. Today, most

people do not work in factories or farms. Instead, they are found

in sales, banks, education, healthcare, law firms and insurance

firms. They provide services such as catering, writing computer

software or advertising and delivering goods. These jobs

primarily involve working with, creating or distributing new

knowledge or information (Cortada, 245-246).

Knowledge and information work account for about 70% of the

labor force in the US. Computers have taken over many of the

tedious tasks that humans once performed. Consider that only a

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generation or so ago: taking cash out from your bank account

involved queuing at the bank’s counter, having the cashier give

you the money and manually note the transaction in a book;

putting a newspaper together involved picking up individual

letters made out of lead and placing them manually in position,

with correct spacing achieved by placing a strip of lead between

lines; all long distance calls had to go through an operator who

manually made the connection. The introduction of computers has

in many instances led to a change in the types of job available.

Many publishing firms feared that desktop publishing would result

in fewer jobs in the publishing and printing industries. In fact,

thousands of new publishing and printing companies have been

created in the last decade- a quick flip through the yellow pages

under ‘printing’ will verify this! In several cases, workers that

are displaced by the use of computers are sometimes re-trained to

perform computer related jobs that may be more satisfying than

their original jobs (Henderson, 255).

b. Internet

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There is an increased use of internet in higher learning

institutions whereby education is delivered and supported through

information and communication technologies. The common term used

is “E-Learning” which is the use of internet to access learning

resources, interacting with contents, instructors, and other

learners in order to obtain support during the learning process,

with the aim of acquiring knowledge, constructing personal

meaning, and growing from the learning experience. This type of

learning has led to the displacement of instructors because one

instructor can teach many students based at different locations

at the same time. This is achieved through video conferencing

that is facilitated by the internet (Ferrer, 87). Also, the

internet has led to the creation of E-government which beginning

to deliver improvements in professional support systems and

national productivity, assisting various government agencies, and

departments in solving service delivery problems, processing

information, creating new knowledge, and developing new services.

The need to increase the exploitation of e-government

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capabilities may lead do displacement of workers in various

government departments (Curtin, 68).

c. Phone

In the past, almost all organizations employed many people to

work as messengers whose work was to carry letters physically

from one place to another. Later, the invention of telephones and

mobile phones made possible more rapid transmission of messages

without people having to physically move from one organization to

another. The use of phones in organizations has led to the

displacement of people who worked as messengers because one

person/secretary can deliver the required information to the

required destinations.

d. Televisions

Televisions have altered the nature of leisure and

entertainment which used to employ many people in the past. For

instance, several people applied their skills as artisans who

could entertain people and earn a living. In the past, people

organized concerts whereby they could act and get paid.

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Televisions have changed the scenario because people no longer

want to live performances. Instead they watch such programs on

televisions and hence the artists who performed before audiences

to earn a living are displaced. Also, televisions have enhanced

the passing of information to wider geographical areas within a

very short time. In the past people were being sent to deliver

such information. These people have been displaced by televisions

(Landau, 78).

Conclusion

Yes, the introduction of new technology may reduce the

number of jobs in the directly and indirectly affected areas or

industry. On the other hand, it may increase the number because

increased productivity resulting for the advanced new technology

will increase demand, and more workers will be necessary to

satisfy it. Even if there is a loss of jobs in specific

industries, new jobs will be created in support areas for the new

technology, in whole new industries resulting from unpredictable

technology, and in the service and white collar areas.

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Mechanization and automation have concentrated human work.

Devices like television stations and office computers permit a

few skilled operators to replace greater number of humble

laborers. The machines work prodigiously but require human

direction and assistance. Some see this as a natural, desirable,

and inevitable relation between humans and machines, implicitly

drawing a line between human and machine skills. But the boundary

is not static. Machines cannot yet match human motor control,

judgment or emotional empathy. But they are advancing rapidly on

all fronts, and the human component of competitive business is

shrinking. A telephone, a cash register, or a milling machine

requires a skilled operator for each transaction. Voice mail, a

bank machine, and a computer integrated factory may run

autonomously for days. Rising productivity is a business

imperative as long as customers choose better goods at lowest

prices. Output per worker must increase, and so the amount of

essential labor decreases.

Technology may be cutting-edge, but it is also a double-

edged sword that can cause harm, as well as provider benefit.

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Extreme technological unemployment may come about as intelligent

machines replace more and more human workers in an increasing

number of sectors of the economy, which we already see as mass-

market stores install automatic check-out machines, bookselling

moves away from local bookstores to online services, and

journalistic careers vanish as newspaper subscriptions plummet

and people read blogs instead of magazines. Information

technology facilitates off-shoring of jobs. A standard concept in

economics of innovation is creative destruction, the principle

that innovations often destroy old industries and jobs, but the

result is the creation of more jobs in new firms. The usual

criticism of this postulate is that it does not take account of

the suffering of people who lose employment in old industries,

especially those unable to get jobs in the new industries. But if

we think of creative destruction in terms of a production

function in which old industries are the input and new industries

are the output, we cannot in fact specify exactly what the

function is, especially when innovations of different kinds may

have different consequences. Some scholars suggest that

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innovation has a declining utility function, such that in the

earlier stages of human history the new jobs gained from creative

destruction outnumbered the old jobs lost, but later on in

history, the jobs lost outnumbered the jobs gained. They

postulate we may have passed the inflection point, after which

innovation is more destructive than creative.

The current situation with information technology may

illustrate a different point, conceptualizing innovation as

staged process, in which creation and destruction occur at

different times, following a complex coupling function. For

example, the two could proceed in surges like two same frequency

waves which are out of phase, or even of different frequencies

and thus causing a third kind of wave-like a beat frequency that

occasionally causes either creation or destruction to predominate

without that fact marking a long-term trend. This metaphor

suggests that the current unusually severe economic distress

could be partially caused by an extreme but temporary dissonance

in the rates of progress in various science and technology areas,

which could be harmonized by convergence.

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Work Cited

Allstetter, William, and Tami Schuyler. The Cutting Edge: An

Encyclopedia of Advanced

Technology. New York: Oxford UP, 2000. Print.

Arestis, Philip. The Elgar Companion to Radical Political Economy.

Aldershot, Hants, England:

Elgar, 1994. Print.

Cortada, James W. The Digital Hand. New York: Oxford UP, 2006.

Print.

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Curtin, Gregory G. The World of E-government. New York, N.Y.:

Haworth, 2003. Print.

Ferrer, Nu. Content Management for E-learning. New York: Springer,

2011. Print.

Henderson, Harry. Encyclopedia of Computer Science and Technology. Rev.

ed. New York:

Facts On File, 2009. Print.

Landau, Saul. The Business of America: How Consumers Have Replaced Citizens

and How We

Can Reverse the Trend. New York: Routledge, 2004. Print.

Nof, Shimon Y. Handbook of Industrial Robotics. 2nd ed. New York: John

Wiley, 1999. Print.

Rosenberg, Richard S. The Social Impact of Computers. 2013. Print.

Samanta, Irene. Strategic Marketing in Fragile Economic Conditions. 2010.

Print.