Today, advanced machines like robots pose a significant threat to jobs traditionally performed by human beings. So it’s no surprise that new technological developments in the market are faced with stiff resistance from interest groups like labour unions. Moreover, there are some economists and others who believe that robots could lead us into a future where there are no jobs left to be done by human beings. How realistic are such fears? What in particular does history tell us about the effect of machines on employment?
A 2017 paper by Katja Mann and Lukas Püttmann, “Benign effects of automation: New evidence from patent texts”, seeks to answer this question by looking into a particular period in the history of the U.S. when technological innovation flourished. The authors use a machine-learning algorithm to identify patents filed in the U.S. between 1976 and 2014 that were related to automation. A total of five million patents were granted during this period. They found a tremendous increase in the share of automation-related patents from 25% to 67% between these years. Further, regions which experienced greater automation due to these inventions witnessed an increase, rather than a decrease, in employment. Thus, automation over the years has had a positive effect on U.S. employment. It seems like jobs that were lost in the manufacturing sectors of the economy were more than compensated for by additional jobs created in the services sector.
These findings should not come as any surprise to anyone familiar with the “lump of labour” fallacy, which makes many ordinary people believe that there is only a fixed amount of work to be done to satisfy human wants. Economists, however, have for long assumed that we live in a world of scarcity, where only limited resources are available to satisfy people’s unlimited wants. If so, while robots and other technological advancements can definitely help people produce a lot more than we ever did in our past, they will never be enough to satisfy all human wants. Thus, fears of machines obliterating human labour may be far-fetched.