The Employment-Impact of Automation
in Canada
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
• Re-emergence of popular concern that automation technologies could create widespread, persistent unemployment
Motivation for Study• Could automation-driven unemployment become a significant
policy problem for Canada in the near future?
Introduction
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
• Impact of technology on Canadian employment in the recent past?• What evidence that the impact of technology will be
different in the near-future?
A. Establishing the issue
B. Estimating the magnitude of the problem• Policy problem formulation• Research question• Research findings
C. Policy Implications• Prerequisites and policy options
Study Structure
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
• Significant increase in industry-level capital-labour ratios• No obvious long-term trend in unemployment rates
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2
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1. OECD (2014a) 2. OECD (2014b)
Explanation
• Significant shift in industry-level shares of total employment
• Labour reallocation from industries where technology is labour-substituting to where it is labour-complementing
What was the impact of technology on Canadian employment in the recent past (1970-2008)?
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
A. Establishing the Issue
OECD (2014a), author’s calculations
Total change in industry share of employment (1970-2008)
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
A. Establishing the Issue
Falling employment in many ‘routine’ occupations Rising employment in ‘non-routine’ occupations
Empirical Evidence (1980s-2000s)
3. Autor and Dorn (2013); Beaudry, et al. (2013); Green and Sand (2014)
3
Recent Signals (2010-Present)
What evidence that the impact of technology will be different in the near-future?
Automation of low-skill ‘non-routine’ occupations Automation of some high-skill ‘non-routine’ occupations
Implication• Rapid and ongoing development and diffusion of
automation technologies across skill distribution
A. Establishing the Issue
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
Policy ProblemThe development and diffusion of current and near-future automation technologies could lead to historically high levels of unemployment in Canada
Research QuestionWhat proportion of Canadian employment is at risk for automation in coming decades?
Objectives of Analysis• Employment-impact at aggregate and industry levels• Employment-impact based on current and projected
occupational distribution of workforce
B. Estimating the Magnitude of the Problem
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
1. Occupation automation probabilities• Probability inversely related to skill-content that resists
automation due to ‘technology bottlenecks’
4. Frey and Osborne (2013)
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B. Estimating the Magnitude of the Problem
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
• Risk Categories: Low (0-30%), Medium (31-70%), High (71-100%)• How many Canadian jobs fall into the ‘High’ category?
2. Apply automation probabilities to Canadian employment data
i. Canadian occupational employment data for 2013ii. Canadian occupational employment projections for 2022
3. Calculate Automation Susceptibility Scenariosi. Maximum Employment-Impact Scenario ii. Risk-Adjusted Employment-Impact Scenario
Caveat• Scenarios do not factor in non-technological barriers to
automation (e.g. cost, consumer preferences)
B. Estimating the Magnitude of the Problem
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
Total Employment at High Risk for Automation
High Risk Employment by Occupational Grouping
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
B. Estimating the Magnitude of the Problem
Employment-Share and Proportion at High Risk (2013)
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
B. Estimating the Magnitude of the Problem
A Critical Prerequisite• A comprehensive Canadian labour market information system
Time-Frame Policy Challenge Potential Policy Response
Short-term(10 years)
Unemployment due to declining labour demand in low-skill occupations
National Skills-Training Framework
Medium-term(10-20 years)
Unemployment due to declining labour demand across skill distribution
Increased public assistance for viable SME* development
Long-term(20+ years)
Maintaining Canadian living standards in a context of persistently weak labour demand
Broad-based redistribution programs (e.g. Universal Basic Income)
Policy Responses
*Small-and-medium size enterprises (5-99 employees)
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
C. Policy Implications
1. Rapidly expanding technological capabilities continue to weaken barriers to automation
2. Substantial proportion of Canadian employment appears to be at high risk for automation in coming decades
3. Characteristics of policy problem will likely change over time and will require a flexible policy response
4. Several unknowns • Pace of technological change: over- or underestimated? • Pace of automation: continuous or punctuated? • Impact of non-technological barriers to automation on
estimates
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
Conclusion
Autor, D. H., Dorn, D. (2013). The growth of low-skill service jobs and the polarization of the US labor market. American Economic Review, Vol. 103, No. 5, pp. 1553-1597
Beaudry, P., Green, D. A., Sand, B. (2013). The great reversal in the demand for skill and cognitive tasks. NBER Working Paper No. 18901
Frey, C. B., Osborne, M. A. (2013). The future of employment: How susceptible are jobs to computerisation? Mimeo. Oxford Martin School, University of Oxford.
Green, D.A., Sand, B. (2014). Has the Canadian labour market polarized? CLSRN Working Paper No. 133. Vancouver, BC: Canadian Labour Market and Skills Researcher Network.
OECD. (2014a). STAN Database for Structural Analysis. OECD.Stat.
OECD. (2014b). Short-Term Labour Market Statistics. OECD.Stat.
The Employment-Impact of Automation in CanadaColin McLean, School of Public Policy, Simon Fraser University
2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS
References