SOCI 235 Lecture Notes - Lecture 15: Aggregate Demand, Discouraged Worker, Jeremy Rifkin
8 Jun 2018
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SOCI 235 – Technology and Society
Technology and Aggregate Employment
Containerization eliminated a large # of jobs in ports
• Introduction of cutting machines eliminated a large numbers of jobs in the logging
firm studies
• Many examples of this:
o Early 19th century workers in the hosiery and lace industries in England broke up
knitting machines – called Luddites – and motivated by fear of job elimination
o Transportation in horse drawn carriages was replaced by streetcars and railways,
large # of jobs were eliminated
o Development of the microchip and computerization eliminated large # of jobs
• Easy to find job-elimination by technology
What is the aggregate effect of technological innovation?
• Alfred Sauvy provides some initial broad historical evidence on the association between
technological innovation and state of labour market
o During industrial revolution, labour productivity and employment rose
o Countries with high unemployment have low productivity growth
▪ 3rd world exemplifies this (with their low productivity growth and high
unemployment rates)
▪ Rich countries – UK had both low productivity growth and high
unemployment in 1970s and into early 1980s
o Japan – high productivity growth until 1990, very low unemployment
• Because this is what happeed i the past does’t ea that it will happen in the
future
o Writer, Jeremy Rifkin in The End of Work, argued that the amount and speed of
innovation, associated with information and computer technology are
destroying jobs which will never be replaced
o Result is rising unemployment in both the rich world and in poor countries
Evidence of unemployment:
• Unemployment – people who do not have employment and are seeking work
• Rate of unemployment – number unemployed/number in the labour force
• Labour force – those who are either employed or unemployed
• Not in the labour force – important category, 3rd labour relevant category
• Cross-Canada evidence:
o Rates from 1993 to 2012 – reveal there is no clear trend (they rise in some
countries but not in others), and considerable differences across countries in
levels (NOT a world with secular tendency to technological unemployment)
▪ This suggests there are differences between countries, possibly in their
institutions, which produce higher or lower rates of unemployment
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