COMPUTERS, GLOBALIZATION, AND THE AMERICAN WORKER: WHICH POLICIES WILL CREATE JOBS IN THE FUTURE? Chinhui Juhn Henry Graham Professor of Economics University of Houston
Jan 08, 2016
COMPUTERS, GLOBALIZATION, AND THEAMERICAN WORKER: WHICH POLICIES WILL CREATE JOBS IN THE FUTURE?
Chinhui JuhnHenry Graham Professor of Economics
University of Houston
I. SOME BAD NEWS
Trend in Civilian Employment has Reversed 5
56
06
5
1950 1960 1970 1980 1990 2000 2010
Employment to Population NBER Recessions
Civilian Employment to Population Ratio
Employment is Falling for Men, Especially Among the Less Educated
60
70
80
90
100
1970 1980 1990 2000 2010year
Less than High School High School GraduateSome College Bachelor's or more
Employment to Population Ratio for Prime Aged Males
Labor Share of National Income is Falling
And the Dynamism?
John Haltiwanger, “The U.S. Labor Market is Still Anemic Two Years After the End of Recession”
II. TWIN THREATS
• Technology• Globalization and Trade
Computers and Tasks
Routine Non-Routine
Analytical Record-keepingCalculationRepetitive customer service (e.g. bank teller)
Forming/testing hypothesesPersuading/sellingManaging others
Manual Picking and sortingRepetitive assembly
Janitorial servicesHome health careMotor vehicle operators
Autor, Levy, Murnane, Quarterly Journal of Economics, 2003, Table 1
And now there is the Google Car…
Globalization and Trade
Globalization and Trade
• Since 1990, and especially since China joined the WTO in 2000, low-wage country share in U.S. imports grew from 3% in 1991, 12% in 2007
• In a recent paper, Autor, Dorn, and Hanson (2013) estimate that import competition can explain up to one-fourth of the decline in U.S. manufacturing employment 1991-2007
• Alan Blinder estimates that close to 30% of U.S. jobs are potentially off-shoreable (World Economics, 2009)
IV. WHAT POLICIES?
• Education• Immigration
Early Childhood Programs Work
• The Perry Program in the 1960s showed that intense intervention yields high return (6-10% return per dollar cost (Heckman, et. al, 2010))
• Head Start, a large-scale public program, is also effective• Closes the test gap by about 1/3 when measured at age 5• Long-term effects on high school graduation and crime• If include reductions in crime and welfare benefits, easily pass the
cost-benefit test
• Often the impact is on non-cognitive skills such as motivation, self-esteem, locus of control
Return to Investment in (Human) Capital
V. SURPRISING BUT IMMIGRATION CAN HELP
International Migration is on the Rise
High Concentration of Skilled Immigrants in STEM
Immigrants Boost Innovation and Job Growth
• Immigrants patent at higher rate than natives (Gauthier-Loiselle and Hunt (2010))
• Raising the cap on H-1B visas boost patent activity (Kerr and Lincoln (2009))
• Immigrants are more likely to start their own businesses (Fairlie 2010)
• Forty percent of Fortune 500 companies were founded by immigrants or their children (Partnership for a New American Economy)
What about Low Skilled Immigration?
• Evidence is mixed with some finding small to no impact on natives and others finding larger effects
• Key question is whether immigrants substitute for or complement natives
• More recent work that takes account at detailed occupation level where immigrants and natives work find that immigrants complement natives (Peri and Sparber (2009)) and actually raise native wages
To Conclude…
“If you invest in the American worker, the jobs will come.”