Labor Demand in the Past, Present, and Future

Since the beginning of the Industrial Revolution, technological change has led to the automation of existing tasks and the creation of new ones, as well as the reallocation of labour across occupations and industries. These processes have been costly to individual workers, but labour demand has remained strong, and real wages have steadily increased in line with productivity growth. I provide evidence suggesting, however, that in recent decades automation has outpaced the creation of new tasks and thus the demand for labour has declined. There is strong disagreement about the future of labour demand, and predictions about technological breakthroughs have a poor track record. Given the importance of overall labour demand for workers’ standard of living as well as their ability to adjust to a changing labour market, obtaining accurate forecasts should be a priority for policy makers.