Are Robots Taking Our Jobs?

• DOI: http://doi.org/10.1111/1467-8462.12245
• Author: Michael Coelli,Jeff Borland
• Published date: 01 December 2017
• Date: 01 December 2017

Are Robots Taking Our Jobs?

Jeff Borland and Michael Coelli*

Abstract

This article assesses the effect of computer-

based technologies on employment in

Australia. We f‌ind that: (i) the total amount

of work available has not decreased following

the introduction of computer-based technolo-

gies; and (ii) the pace of structural change and

job turnover in the labour market has not

accelerated with the increasing application of

computer-based technologies. A review of

recent studies that claim computer-based

technologies may be about to cause wide-

spread job destruction establishes several

major f‌laws with these predictions. Our

suggested explanation for why techno-phobia

has such a grip on popular imagination is a

human bias to believe that ‘we live in special

times’.

The consequences of adverse economic events are

typically exaggerated by the Armageddonists –a

sensation-seeking herd of pundits, seers, and journalists

who make a living by predicting the worst. Prognos-

tications of impending doom draw lots of attention, get

you on TV, and sometimes even lead to best-selling

books ... But the Armageddonists are almost always

wrong.

[Alan Blinder 2014, p. 119]

1. Introduction

Commentary today on the Austra lian labour

market abounds with claims tha t the world of

work is undergoing radical and unprece-

dented change. That chang e is for the most

part attributed to the incr eased application of

computer-based technolo gies in the work-

place—most recently, artif‌icial intelligence

(AI) and robotics. To suppor t the claims, one

of two arguments is generally ma de: either

that the new technologies ar e causing a

reduction in the amount of avail able work;

or that a more rapid pace of substi tution of

machines for humans is increasin g the rate of

job destruction and requirin g workers to

churn between jobs at a faster speed th an

ever before.

The following quotes—taken from the

Australian literature on the future of work—

illustrate each of the arguments:

... work looks, to my eyes, like an idea that has

outlived its usefulness. I would go as far to say t he era

of full-time work is coming to an end a nd we have to

stop holding out the false pro mise that at some

magical moment the jobs are going to reappear.

[Dunlop 2016, p. 4]

The historic waves of the Indus trial Revolution

resulted in ever increasing rep lacement of human

with mechanical brawn ... Th e information and

telecommunications advan ces detailed in this report

are likely to do exactly that to a ra nge of activities

associated with tradition al white-collar activity ...

* Borland and Coelli: Department of Economics, The

University of Melbourne, Victoria 3010 Australia. Corre-

sponding author: Borland, email <jib@unimelb.edu.au>.

A version of this article was initially presented as an invited

lecture at the Commonwealth Department of Employment

in April 2017. It has also been presented in seminars at

Swinburne University, Deakin University and the Depart-

ment of Prime Minister and Cabinet. We are grateful for

valuable comments from many participants at those talks.

We thank Graeme Davison and Geoff Blainey for helpful

suggestions on historical literature, Ulrich Zierahn for

assistance in constructing estimates of the automation risk

of Australian jobs using the Arntz, Gregory and Zierahn

(2016, 2017) procedure, and David Autor, John Daley, Jim

Minif‌ie, Leon Mann and Greg Williams for extremely

useful suggestions. Research in this article has been funded

by ARC Discovery Grant DP160102269.

The Australian Economic Review, vol. 50, no. 4, pp. 377–97

°

C2017 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Published by John Wiley & Sons Australia, Ltd

This is not a new trend, but the p ace of change

is potentially considerabl y faster than in the past.

[Taylor 2015, p. 17]

1

Certainly, there has been rapid growth in the

use of information technology (IT) in Australia

in recent decades. This can be seen in Figure 1,

which shows the net capital stock of com-

puters, software and electronic equipment in

Australia from 1966 onwards.

2

The use of

computers and IT in Australia began to

increase from the early 1980s, and then

increased much more rapidly from the mid-

1990s onwards. The growth in the role of IT

has been driven by a massive reduction in the

cost of using computers that has also occurred

since the early 1980s (see, for example,

Nordhaus 2007).

Evidence for the claimed effects of computer-

based technologies on the labour market,

however, is remarkably thin. Sometimes it

consists simply of descriptions of the new

technologies, perhaps with an assertion that

these technologies are more transformative than

what has come before. Sometimes it consists of

forecasts of the proportion of jobs that will be

destroyed by the new technologies. Sometimes

measures are presented that, it is argued,

establish that the new technologies are causing

workers to lose their jobs or be forced to

shift between jobs more frequently than in

the past. Sometimes the evidence is an

argument that categories of workers not previ-

ously displaced by technological change are now

being affected.

Each of these types of ‘evidence’has its own

problems. Whether a new technology is having

a transformative impact on the labour market

can only be judged by analysis of its effect on

labour market outcomes. Associating new

technologies with the jobs that they may

destroy fails to take account of the jobs that

will also be created by those new technologies;

and ignores that job destruction due to new

technology has always been a major feature of

modern economic development. Measures that

are used to demonstrate higher levels of job

turnover are f‌lawed, and often contrived. And it

is not uncommon for new technologies to

displace workers whose jobs had previously

seemed secure, without implying that aggre-

gate job loss is increasing.

Inthisarticlewepresentawiderangeof

measures of outcomes in the Australian labour

Figure 1 Net Capital Stock of Computers, Software, and Electronicand

Electrical Equipment,All Industries, Constant Value Measure, 1966–2016(June)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

$billion

Computers and peripherals

Electrical and electr onic equipment

Computer software

Source: ABS (2017b, Table 69).

378 The Australian Economic Review December 2017

°

C2017 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research