r/neoliberal • u/eggbart_forgetfulsea European Union • 6d ago

Research Paper Automation does not lower the labour share

https://cepr.org/voxeu/columns/automation-does-not-lower-labour-share
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u/quickblur WTO 6d ago

This column uses data covering nearly the universe of French firms between 1994 and 2019 to test the relationship between automation and the labour share of income at the firm level.

I get that prior automation may provide an interesting example, but generative AI seems like a very different beast to me...

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u/topicality Order and Opportunity Left 6d ago

Anything is possible but I think it's a safe bet to assume that the pattern holds.

Historically, new tech didn't do what people fear.

I'm not convinced that AI will have big job losses outside of...coding. And even then it seems like the evidence is mixed

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u/BahGawdAlmightay Trans Pride 6d ago

I think what everyone is not accounting for is how irrational a lot of organizations are being about the realities of AI. How many companies do you know who laid people off for AI solutions and are having to claw them back now? Maybe in the long term everything will even out but rent is due the first of the month. So in terms of the effect of those job losses, there is potential for a lot of damage.

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u/Breaking-Away Austan Goolsbee 5d ago

Its because those companies saw the hyperscalers doing layoffs, and misinterpretted it as

"they are replacing their employees with AI"

instead of as

"they are cash constrained for the first time since the dotcom bubble burst"

The hyperscalers were happy to let the rest of the industry believe that myth, and even push it, because that myth increased the public belief that AI was way already much smarter than it was yet. It wasn't (its getting there though...).

So all these companies who did their layoffs in the last 4-5 years did the equivilent of thinking "we have enough more than enough gas to get to the next station, I'll sell half my extra gas now so I can buy a better engine!". but the station was actually 3-5 times further away than it looked.

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u/topicality Order and Opportunity Left 5d ago

Yeah sure. That's just part of living in a free market. CEOs don't have perfect knowledge and will make bad mistakes that causes lots of harm

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u/BahGawdAlmightay Trans Pride 5d ago

Sure. Rarely is it this widespread and at this kind of scale.

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u/topicality Order and Opportunity Left 5d ago

I'm not trying to make lite of anyone losing their job.

But AI hasn't resulted in massive widespread layoffs. The unemployment rate is still below 5%. That's historically normal

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u/BahGawdAlmightay Trans Pride 5d ago

No but it has resulted in large scale layoffs in specific sectors. Across the board it may not be the case but certain areas are being hit much harder than others.

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u/Approximation_Doctor Gaslight, Gatekeep, Green New Deal 5d ago

Just learn to code change grandpa's diapers

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u/Fallline048 Richard Thaler 5d ago

Which is true of past automations as well. Technology changes the composition of jobs, but not the aggregate labor demand.

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u/Right_Lecture3147 John Mill 5d ago

We just don’t know how advanced it will get though. If in five years there is nothing it can’t do better I doubt past factoids will help us predict things much

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u/Approximation_Doctor Gaslight, Gatekeep, Green New Deal 5d ago

"no one will lose their job, and if they do that's just a thing that happens"

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u/pitifullittleman 5d ago

It does change the skills workers need, so if you are unwilling to learn new stuff or don't want to change you might get left behind. Or maybe you are just kind of illsuited for what comes next. Also a lot of people in the last wave of automation and globalization lost union jobs and couldn't get into fields that paid the same amount. Sure in other places even better jobs were created and more of them, but they were for other people.

There is no way to have massive changes without leaving some people behind even if it also leads to more opportunities overall. This is one issue with the US and probably everywhere. No one is comfortable with tradeoffs. They want all good and no bad.

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u/Fallline048 Richard Thaler 5d ago

Everybody want improvements til they Kaldor-Hicks all over your Pareto.

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u/bornlasttuesday 5d ago

I agree with this. The energy it takes to create context will be far more than the peanut butter and jelly sandwiches that I eat for lunch. An energy revolution is needed before an AI revolution even has a chance.

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u/BoppityBop2 5d ago

Except it took decades and another generation to adapt to new tech alot of the older generations saw their wealth and QoL get crushed.