the employment-impact of automation in canada colin mclean, school of public policy, simon fraser...

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



• 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



• Significant increase in industry-level capital-labour ratios• No obvious long-term trend in unemployment rates

1

2

2

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)?



A. Establishing the Issue

OECD (2014a), author’s calculations

Total change in industry share of employment (1970-2008)




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




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



1. Occupation automation probabilities• Probability inversely related to skill-content that resists

automation due to ‘technology bottlenecks’

4. Frey and Osborne (2013)

4




• 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)




Total Employment at High Risk for Automation

High Risk Employment by Occupational Grouping




Employment-Share and Proportion at High Risk (2013)




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)



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



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.



References

the employment-impact of automation in canada colin mclean, school of public policy, simon fraser...

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