Joseba Martinez_Discussant comments_IMF OECD WB Conference Sept 2020

Distributional aspects of technological change and digital adoption Discussion by Joseba Martinez LBS & CEPR

Joint IMF-OECD-World Bank Conference: Improving the Income Distribution Effect of Market Reforms in a Post-COVID-19 World September 2020

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Introduction

Two very interesting papers: Steering Technological Progress, by Korinek and Stiglitz Digital Adoption, Automation, and Labor Markets in Developing Countries, by Finkelstein Shapiro and Mandelman

Brief comments on each Overview of a policy debate that this work informs I’ll try to end on an optimistic note

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Steering Technological Progress

Provocative and thought-provoking paper Premise: Planner’s preferences and HH endowments differ Redistribution through taxes and transfers is infeasible

Stylized model of ’ex-ante’ redistribution: subsidize tech. progress that favours some types of labor vs. others Authors acknowledge that steering progress is a difficult task As much about nudging innovators as informing policy

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Comments on Steering Technological Progress

Mostly skirts the vexed question of factor supply elasticities Even in very stylized model, policy advice depends heavily on parameters: K and L gross complements? Subsidize capital tech. to help labor!

K and L gross substitutes? Subsidize labor tech. to help labor!

Example of ride-sharing is instructive: spare a thought for London’s cab drivers and their ’Knowledge’

Some really interesting directions for further research (and first-order concerns for policy makers): How to think about non-monetary benefits of work Interactions between technology and labor/firm market power

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Digital Adoption, Automation, and Labor Markets in Developing Countries

Authors develop a rich theoretical model that can replicate these facts Key insight: cost of business creation AND digital tech adoption required for calibrated model to resemble data

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Comments on Digital Adoption, Automation, and Labor Markets in Developing Countries

My take: data suggest that technological unemployment is second order concern (at least, starting from a low base) Adoption of digital technology is essential But can’t take for granted that benefits will be widely shared (Conjecture) In language of paper: if tech. adoption cost falls but business creation cost stays high, gains from tech. are concentrated Focus on implication for factor shares, wage premiums

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Two approaches to mitigating distributive effects of tech. progress and adoption

Steer progress Nudges? Taxes and subsidies for R&D? Perhaps directing R&D not needed - at tech. adoption stage we have much better understanding of effects

Manage redistributive effects of technology Taxation & Redistribution Retraining & Upskilling Encourage technological diffusion (Finkelstein Shapiro and Mandelman (2020), Martinez (2019))

Some suggestive evidence that managing effects is not a lost cause

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Robot Penetration - Europe vs US

From Dauth, Findeisen, Suedekum and Woessner (2017)

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im

Manufacturing Labor Shares - Europe vs US

From GutieĚ rrez and Piton (2020)

Discussion by Joseba Martinez LBS & CEPRDistributional aspects of technological changeJoint and digital IMF-OECD-World adoption Bank Conference: Im