IMF: Women, Technology, and the Future of Work [feedly]

Women, Technology, and the Future of Work
https://blogs.imf.org/2018/11/16/women-technology-and-the-future-of-work/

By Era Dabla-Norris and Kalpana Kochhar

November 16, 2018

Women are currently underrepresented in fields experiencing job growth, such as engineering and information and communication technology (photo: Vgajic/iStock by Getty Images)

The way we work is changing at an unprecedented rate. Digitalization, artificial intelligence, and machine learning are eliminating many jobs involving low and middle-skill routine tasks through automation.

Our new research finds the trend toward greater automation will be especially challenging for women.

More than ever, women will need to break the glass ceiling.

On average, women face an 11 percent risk of losing their jobs due to automation, compared to 9 percent of their male counterparts. So while many men are losing their jobs to automation, we estimate that 26 million women's jobs in 30 countries are at high risk of being displaced by technology within the next 20 years. We find that women's jobs have a 70 percent or higher probability of automation. This translates globally to 180 million women's jobs.

We must understand the impact of these trends on women's lives if we are to gain gender equity in the work place.

What policies can countries implement now to ensure that women contribute to the economy, while moving toward greater automation?

Women at higher risk

Hard-won gains from policies to increase the number of women in the paid workforce and to increase women's pay to equal men's may be quickly eroded if women work predominantly in sectors and occupations that are at high risk of being automated.

• Women who are 40 and older, and those in clerical, service, and sales positions are disproportionately at risk.
• Nearly 50 percent of women with a high school education, or less, are at high risk of their jobs being automated, compared to 40 percent of men. The risk for women with a bachelor's degree or higher is 1 percent.
  
  

The chart below shows how the automation of jobs effects people in different countries. Men and women in the United Kingdom and the United States face about the same amount of risk for job automation. In Japan and Israel, women's jobs are more vulnerable to automation than men's. Women's jobs in Finland are less vulnerable to automation than men's.

Opportunities and challenges

Women are currently underrepresented in fields experiencing job growth, such as engineering and information and communications technology. In tech, women are 15 percent less likely than men to be managers and professionals, and 19 percent are more likely to be clerks and service workers performing more routine tasks, which leaves women at a high risk of displacement by technology.

More than ever, women will need to break the glass ceiling. Our analysis shows that differences in routineness of job tasks exacerbate gender inequality in returns to labor. Even after taking into account such factors as differences in skill, experience and choice of occupation, nearly 5 percent of the wage gap between women and men is because women perform more routine job tasks. In the US this means women forfeit $26,000 in income over the course of their working life.

There are some bright spots. In advanced and emerging economies, which are experiencing rapid aging, jobs are likely to grow in traditionally female-dominated sectors such as health, and social services―jobs requiring cognitive and interpersonal skills and thus less prone to automation. Coping with aging populations will require both more human workers and greater use of artificial intelligence, robotics, and other advanced technologies to complement and boost productivity of workers in healthcare services.

Policies that work

Governments need to enact policies that foster gender equality and empowerment in the changing landscape of work:

• Provide women with the right skills. Early investment in women in STEM fields, like the program Girls Who Code in the US, along with peer mentoring, can help break down gender stereotypes and increase women in scientific fields. Tax deductions for training those already in the workforce, like in the Netherlands, and portable individual learning accounts, like in France, could help remove barriers to lifelong learning.
• Close gender gaps in leadership positions. Providing affordable childcare and replacing family taxation with individual taxation, like in Canada and Italy, can play an important role in boosting women's career progression. Countries can set relevant recruitment and retention targets for organizations, as well as promotion quotas, like in Norway, and establish mentorship and training programs to promote women into managerial positions.
• Bridge the digital gender divide. Governments have a role to play through public investment in capital infrastructure and ensuring equal access to finance and connectivity, like in Finland.
• Ease transitions for workers. Countries can support workers as they change jobs because of automation with training and benefits that are linked to individuals rather than jobs, like the individual training accounts in France and Singapore. Social protection systems will need to adapt to the new forms of work. To address deteriorating income security associated with rapid technological change, some countries may consider expansion of non-contributory pensions and adoption of basic income guarantees may be warranted.

Automation has made it even more urgent to step up efforts to level the playing field between men and women, so that all have equal opportunities to contribute to, and benefit from, the new more technology-enabled world.

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Our November/December Issue Is Out! [feedly]

Our November/December Issue Is Out!
http://dollarsandsense.org/blog/2018/11/our-novemberdecember-issue-is-out.html

Our November/December issue has been sent to e-subscribers and should be in the mail to print subscribers. The cover story, "Trying Again for Full Employment," by Gertrude Schaffner Goldberg, is now posted, here; find the table of contents here.

Here is the p. 2 editors' note:

Jobs for All

The outcome of the midterm elections, with the Democrats capturing the House but not the Senate, means that any promising legislation the Democrats come up with will be largely symbolic. But symbolism is important, especially in the run-up to the 2020 elections, given that many people have been wondering what the Democratic Party stands for these days besides being against Trump. Forcing Republicans to vote against bold and appealing initiatives that meet people's needs would be good preparation for the next election season. There are lots of issues that could engage voters (and, importantly, non-voters): a federal $15/hour minimum wage, Medicare for All, bold action on climate change.
With this issue, Dollars & Sense begins an article series on one promising legislative initiative that could be a centerpiece of a bold social-democratic agenda: a federal job guarantee. In this issue's cover story, Gertrude Schaffner Goldberg looks at two previous attempts at full-employment legislation, in the 1940s and the 1970s, which initially included an enforceable job guarantee, but dropped it by the time the laws passed. The Democrats should learn the lessons of those earlier efforts and get it right this time.
With the talk in the business press about the strength of the Trump economy, you might think that this is the wrong time to talk about full-employment efforts. But as John Miller shows in his column, praise for the Trump economy—whether on employment, wage rates, GDP growth—"is built on half-truths, statistical misdirection, and outright falsehoods." Millions of people are still out of work even as the unemployment rate has declined. And as Goldberg points out, we should think of a job guarantee the way we think of unemployment insurance: "protection that is always needed but for which the level of need varies" with the business cycle. Come 2020, protection from unemployment may be a much bigger selling point than it is now.
Also in this issue: the third and final part of economist Marie Duggan's series, "Deindustrialization in the Granite State," draws lessons from a story of reindustrialization with the development of the Diamond Turning Machine; Gerald Friedman gives us a retrospective on the global economy ten years since the financial crisis; plus reviews of books on on radical textile workers and on Basic Income Guarantee (a main alternative to a job guarantee); and more!

VISIT WEBSITE
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Chris Dillow: Why the left needs "bottom" [feedly]

Chris Dillow (of stumbling and mumbling blog) is a left wing UK financial advisor -- with a sharp tongue and a knowledge of both the
"economics" and  'left' landscapes too.

Why the left needs "bottom"
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/11/why-the-left-needs-bottom-1.html

Conservative men of a certain age used to speak approvingly of some men (it was always men) as having "bottom". By this they meant a combination of a moral code and loyalties that gave them a solid reliability.

I was reminded of this by these words of John McDonnell:

We've got to convert ordinary members and supporters into real cadres who understand and analyse society and who are continually building the ideas.

This is absolutely bang right.

Underlying his words is a fear – that the massive current popularity of Corbynism might just be a fad.

There's ample precedent here. The revolutionary ideals of the 68ers faded as they acquired careers and (cheap) property. The Greens won 15% of the vote in 1989, but that soon vanished. And of course there are countless people who, in Christopher Hitchens' words, made the stagger from left to right – and who rarely became less employable as a result. Personally, I wouldn't stake my wealth upon Aaron Bastani or Laurie Penny being vocal leftists in 30 years' time.

The vogue for Corbynism could go the same way. Although McDonnell is giving the programme real and often inspiring economic content, there's danger that Corbynistas themselves are motivated by what James Bloodworth calls "a vague and muddled ideal", a backlash against "neoliberalism." If your leftism consists only of an emotional spasm, a belief that Tories are "evil", it will not long survive contact with real human beings.

Nick Cohen has long complained that leftists have lost touch with their better values and adopted a "my enemy's enemy is my friend" mentality that has seem them "excuseantisemitsm, misogyny, tyranny, and obscurantism, as long as the antisemitic, misogynistic, tyrannical obscurantists are anti-Western." I know many of you reject this account. But in a sense it speaks to what McDonnell fears – that a leftism which is just childish rebellion cannot last long or grow large.

It's in this context that the left needs "bottom" – ballast that stops it drifting with the tides of fashion and instead becomes a genuine solid force for change.

Classical Marxists understated the problem here. They thought workers would be so desperately poor and exploited that they'd have nothing to lose but their chains and so would become radicalized. They were wrong. Yes, one factor behind Corbynism is that erstwhile "middle-class" jobs have become proletarianized; professionals have both lost some autonomy at work and become unable to afford a house.  Resentment alone, however, is not a strong enough base for lasting leftism. It might not survive career progression and more affordable housing.

It's in this context that McDonnell is right to say the left needs an understanding of society. Of course, it would take far too long to spell out exactly what this would consist of. For me, a key principle here is that of complexity. Inequality – of power as well as wealth - does not exist and persist because the rich are evil. It also happens, as Marx recognised. because of impersonal forces which operate with only a little input from people's intentions. Capitalists' influence over the state, for example, happens because politicians want to create jobs and so need to maintain business confidence; support for inequality exists not just because our media is biased but because ideology is endogenous; exploitation occurs not (just) because capitalists are greedy but because competition forces wages and working conditions down.

Equally, the capitalist crisis is the result not just of "greedy bankers" – everyone would like a few quid more – but of impersonal factors causing a lack of capital spending and hence stagnation in productivity and real wages.

A lasting, well-rooted leftism requires an understanding of forces such as these – of why capitalism does not work as we would wish it to. Moralizing is nowhere near enough. The problem is that there are pitifully few institutions that enhance understanding and severalpowerful ones that actively militate against it.

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Krugman: Why Was Trump’s Tax Cut a Fizzle? [feedly]

Why Was Trump's Tax Cut a Fizzle?

Paul Krugman

https://www.nytimes.com/2018/11/15/opinion/tax-cut-fail-trump.html

Last week's blue wave means that Donald Trump will go into the 2020 election with only one major legislative achievement: a big tax cut for corporations and the wealthy. Still, that tax cut was supposed to accomplish big things. Republicans thought it would give them a big electoral boost, and they predicted dramatic economic gains. What they got instead, however, was a big fizzle.

The political payoff, of course, never arrived. And the economic results have been disappointing. True, we've had two quarters of fairly fast economic growth, but such growth spurts are fairly common — there was a substantially bigger spurt in 2014, and hardly anyone noticed. And this growth was driven largely by consumer spending and, surprise, government spending, which wasn't what the tax cutters promised.

Meanwhile, there's no sign of the vast investment boom the law's backers promised. Corporations have used the tax cut's proceeds largely to buy back their own stock rather than to add jobs and expand capacity.

But why have the tax cut's impacts been so minimal? Leave aside the glitch-filled changes in individual taxes, which will keep accountants busy for years; the core of the bill was a huge cut in corporate taxes. Why hasn't this done more to increase investment?



The answer, I'd argue, is that business decisions are a lot less sensitive to financial incentives — including tax rates — than conservatives claim. And appreciating that reality doesn't just undermine the case for the Trump tax cut. It undermines Republican economic doctrine as a whole.

About business decisions: It's a dirty little secret of monetary analysis that changes in interest rates affect the economy mainly through their effect on the housing market and the international value of the dollar (which in turn affects the competitiveness of U.S. goods on world markets). Any direct effect on business investment is so small that it's hard even to see it in the data. What drives such investment is, instead, perceptions about market demand.

Why is this the case? One main reason is that business investments have relatively short working lives. If you're considering whether to take out a mortgage to buy a house that will stand for many decades, the interest rate matters a lot. But if you're thinking about taking out a loan to buy, say, a work computer that will either break down or become obsolescent in a few years, the interest rate on the loan will be a minor consideration in deciding whether to make the purchase.

And the same logic applies to tax rates: There aren't many potential business investments that will be worth doing with a 21 percent profits tax, the current rate, but weren't worth doing at 35 percent, the rate before the Trump tax cut.

Also, a substantial fraction of corporate profits really represents rewards to monopoly power, not returns on investment — and cutting taxes on monopoly profits is a pure giveaway, offering no reason to invest or hire.


Now, proponents of the tax cut, including Trump's own economists, made a big deal about how we now have a global capital market, in which money flows to wherever it gets the highest after-tax return. And they pointed to countries with low corporate taxes, like Ireland, which appear to attract lots of foreign investment.

The key word here is, however, "appear." Corporations do have a strong incentive to cook their books — I'm sorry, manage their internal pricing — in such a way that reported profits pop up in low-tax jurisdictions, and this in turn leads on paper to large overseas investments.

But there's much less to these investments than meets the eye. For example, the vast sums corporations have supposedly invested in Ireland have yielded remarkably few jobs and remarkably little income for the Irish themselves — because most of that huge investment in Ireland is nothing more than an accounting fiction.

Now you know why the money U.S. companies reported moving home after taxes were cut hasn't shown up in jobs, wages and investment: Nothing really moved. Overseas subsidiaries transferred some assets back to their parent companies, but this was just an accounting maneuver, with almost no impact on anything real.

So the basic result of lower taxes on corporations is that corporations pay less in taxes — full stop. Which brings me to the problem with conservative economic doctrine.

That doctrine is all about the supposed need to give the already privileged incentives to do nice things for the rest of us. We must, the right says, cut taxes on the wealthy to induce them to work hard, and cut taxes on corporations to induce them to invest in America.

But this doctrine keeps failing in practice. President George W. Bush's tax cuts didn't produce a boom; President Barack Obama's tax hike didn't cause a depression. Tax cuts in Kansas didn't jump-start the state's economy; tax hikes in California didn't slow growth.

And with the Trump tax cut, the doctrine has failed again. Unfortunately, it's difficult to get politicians to understand something when their campaign contributions depend on their not understanding it.



Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman

A version of this article appears in print on Nov. 16, 2018, on Page A25 of the New York edition with the headline: Why Was Trump's Tax Cut a Fizzle?. Order Reprints | Today's Paper | Subscribe
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Rodrik: Will New Technologies Help or Harm Developing Countries? [feedly]

Will New Technologies Help or Harm Developing Countries?
https://www.globalpolicyjournal.com/blog/16/11/2018/will-new-technologies-help-or-harm-developing-countries

Trade and technology present an opportunity when they are able to leverage existing capabilities, and thereby provide a more direct and reliable path to development. When they demand complementary and costly investments, they are no longer a shortcut around traditional manufacturing-led development.

New technologies reduce the prices of goods and services to which they are applied. They also lead to the creation of new products. Consumers benefit from these improvements, regardless of whether they live in rich or poor countries.

Mobile phones are a clear example of the deep impact of some new technologies. In a clear case of technological leapfrogging, they have given poor people in developing countries access to long-distance communications without the need for costly investments in landlines and other infrastructure. Likewise, mobile banking provided through cell phones has enabled access to financial services in remote areas without bank branches.

These are instances of technology improving the lives of poor people. But for technology to make a real and sustained contribution to development, it must not only provide better and cheaper products; it must also lead to more higher-paying jobs. In other words, it must help poor people in their role as producers as well as consumers. A model of growth that the economist Tyler Cowen has called "cell phones instead of automobile factories" raises the obvious question: How do people in the developing world afford to purchase cell phones in the first place?

Consider again the examples of mobile telephony and banking. Because communications and finance are inputs into production, they are to some extent producer services as well as consumer services.

For example, a well-known study has documented how the spread of mobile phones in the Indian state of Kerala enabled fishermen to arbitrage price differences across local markets, increasing their profits by 8% on average as a result. Kenya's ubiquitous mobile banking service M-Pesa appears to have enabled poor women to move out of subsistence agriculture into non-farm businesses, providing a significant bump up the income ladder at the very bottom.

New digital technologies have been playing an important role in transforming large-scale farming in Latin America and elsewhere. Big data, GPS, drones, and high-speed communication have enabled improved extension services; optimized irrigation and pesticide and fertilizer use; provided early-warning systems; and enabled better quality control and more efficient logistics and supply-chain management. These improvements raise farm productivity and facilitate diversification into non-traditional crops with higher returns.

The introduction of these new technologies in production in developing countries often takes place through global value chains (GVCs). In principle, GVCs benefit these economies by easing entry into global markets.

Yet big questions surround the possibilities created by these new technologies. Are the productivity gains large enough? Can they diffuse sufficiently quickly throughout the rest of the economy?

Any optimism about the scale of GVCs' contribution must be tempered by three sobering facts. First, the expansion of GVCs seems to have ground to a halt in recent years. Second, developing-country participation in GVCs – and indeed in world trade in general – has remained quite limited, with the notable exception of certain Asian countries. Third, and perhaps most worrisome, the domestic employment consequences of recent trade and technological trends have been disappointing.

Upon closer inspection, GVCs and new technologies exhibit features that limit the upside to – and may even undermine – developing countries' economic performance. One such feature is an overall bias in favor of skills and other capabilities. This bias reduces developing countries' comparative advantage in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade.

Second, GVCs make it harder for low-income countries to use their labor-cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These two features reinforce and compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages.

The usual response to these concerns is to stress the importance of building up complementary skills and capabilities. Developing countries must upgrade their educational systems and technical training, improve their business environment, and enhance their logistics and transport networks in order to make fuller use of new technologies, goes the oft-heard refrain.

But pointing out that developing countries need to advance on all those dimensions is neither news nor helpful development advice. It is akin to saying that development requires development. Trade and technology present an opportunity when they are able to leverage existing capabilities, and thereby provide a more direct and reliable path to development. When they demand complementary and costly investments, they are no longer a shortcut around manufacturing-led development.

Compare the new technologies with the traditional model of industrialization, which has been a powerful engine of economic growth in developing countries. First, manufacturing is tradable, which means domestic output is not constrained by demand (and incomes) at home. Second, manufacturing know-how was relatively easy to transfer across countries and, in particular, from rich to poor economies. Third, manufacturing did not make large demands on skills.

These three characteristics collectively made manufacturing a fantastic escalator to higher incomes for developing countries. New technologies present a very different picture in terms of the ease of transferring know-how and the skill requirements they imply. As a result, their net impact on low-income countries looks considerably more uncertain.

 

 

Dani Rodrik is Global Policy's General Editor and Professor of International Political Economy at Harvard University's John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy, Economics Rules: The Rights and Wrongs of the Dismal Science, and, most recently, Straight Talk on Trade: Ideas for a Sane World Economy.

This post first appeared on Project Syndicate and was reposted with permission.

Image credit: Jay Hariani via Flickr (CC BY-SA 2.0)

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Tim Taylor: Superstar Firms and Cities [feedly]

Superstar Firms and Cities
http://conversableeconomist.blogspot.com/2018/11/superstar-firms-and-cities.html

Imagine two people who have seemingly equal skills and background. They go to work for two different companies. However, one "superstar" company grows much faster, so that wages and opportunities in that company also grow much faster. Or they go to work in two different cities. One "superstar" urban economy grows much faster, so that wages and opportunities in that city also grow faster.

Of course, such patterns of unequal growth have always existed  to some extent. When evaluating a potential employer or location choice, people  have always taken into account the potential for joining a superstar performer. The interesting question is whether the gap between superstar and ordinary firms, or between superstar and ordinary cities, has been growing or changing over time. For example, some argue that the rise of superstar firms, and the resulting rise in between-firm performance and labor compentiation, can explain most of the rise in US income inequality.

The McKinsey Global Institute has a nice report summarizing past evidence and offering new evidence of their own in Superstars: The Dynamics of Firms, Sectors, and Cities Leading the Global Economy (October 2018). It's written by a team led by James Manyika, Sree Ramaswamy,  Jacques Bughin, Jonathan Woetzel, Michael Birshan, and Zubin Nagpal. Short summary: Superstar firms and cities do seem to be widening their economic leadership gap, with the evidence that certain sectors are superstars seems weaker.

For superstar firms, the report notes:

"For firms, we analyze nearly 6,000 of the world's largest public and private firms, each with annual revenues greater than $1 billion, that together make up 65 percent of global corporate pretax earnings. In this group, economic profit is distributed along a power curve, with the top 10 percent of firms capturing 80 percent of economic profit among companies with annual revenues greater than $1 billion. We label companies in this top 10 percent as superstar firms. The middle 80 percent of firms record near-zero economic profit in aggregate, while the bottom 10 percent destroys as much value as the top 10 percent creates. The top 1 percent by economic profit, the highest economic-value-creating firms in our sample, account for 36 percent of all economic profit for companies with annual revenues greater than $1 billion. Over the past 20 years, the gap has widened between superstar firms and median firms, and also between the bottom 10 percent and median firms. ... The growth of economic profit at the top end of the distribution is thus mirrored at the bottom end by growing and increasingly persistent economic losses ..."

Here's an illustrative figure, showing firms by decile, and comparing the time windows from 1995-97 and from 2014-2016.

Some other patterns are that the superstar firms "come from all sectors and regions and include global banks and manufacturing companies, long-standing Western consumer brands, and fast-growing US and Chinese tech firms. The sector and geographic diversity of firms in the top 10 percent and the top 1 percent by economic profit is greater today than 20 years ago." Along with being more profitable, superstar firms spend more on R&D and on intangible investments like intellectual property, software, and brand value. In additinon, the rate of movement (or the "churn") in and out of the deciles doesn't seem to have changed much over time. 

"In the top 1 percent by economic profit, only one out of every six of today's superstar firms has been there for the past three decades. They are mostly American and European consumer goods and technology firms that have survived, often through reinvention and adaptation to a changing environment and sustained investment, and they own some of the world's most familiar brands.26 They include Altria, Coca-Cola, Intel, Johnson & Johnson,  Merck, Microsoft, Nestle, and Novartis. They are joined by several other firms that have stayed in the top ranks for two-thirds or more of the past 30 years and that come from a broader set of regions and sectors. These include firms such as Samsung, Toyota, and Walmart, and they make up another one-sixth of the top 1 percent."

The analysis also identifies 50 superstar cities, with a map below.

"Fifty cities are superstars by our definition ... The 50 cities account for 8 percent of global population, 21 percent of world GDP, 37 percent of urban high-income households, and 45 percent of headquarters of firms with more than $1 billion in annual revenue. The average GDP per capita in these cities is 45 percent higher than that of peers in the same region and income group, and the gap has grown over the past decade. ... The growth of superstar cities is fueled by gains in labor income and wealth from real estate and investor income, yet many show higher rates of income inequality within the cities than peers. ... Of the 50 superstar cities, 31 are ranked among the most globally integrated cities, 27 among the world's 50 most innovative cities, 26 among the world's top 50 financial centers, and 23 among the world's 50 "digitally smartest" cities. Twenty-two are national and regional capitals, while 22 are among the world's largest container ports." 

For individuals thinking about potential employers, and for individuals and firms thinking about location decisions, it's useful to consider the potential gains of being connected to a superstar firm or city. 

For a national economy, a different question arises. What is the "special sauce" that superstar companies and cities are using to achieve their outsized and growing levels of productivity and income? Companies and cities will always differ, or course. But the rising advantage of superstars raises a question of how at least some of those practices and policies might be more broadly disseminated across the rest of the economy.

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Report: States Can Use Tax Policy to Advance Racial Equity [feedly]

Report: States Can Use Tax Policy to Advance Racial Equity
https://www.cbpp.org/blog/report-states-can-use-tax-policy-to-advance-racial-equity

States and localities can do more to help undo the harmful legacies of racism and the damage of continuing racial bias and discrimination, a major new Center report finds. If state policymakers can design their budget and tax policies to better address these harms and create more opportunities for people of color, state economies would be more equitable and likely stronger, which in turn could benefit many state residents of all backgrounds.  

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