IDEAS home Printed from https://ideas.repec.org/p/lev/wrkpap/wp_179.html
   My bibliography  Save this paper

Protracted Frictional Unemployment as a Heavy Cost of Technical Progress

Author

Listed:
  • William J. Baumol
  • Edward N. Wolff

Abstract

Neither neoclassical nor Keynesian economics displays much patience with the popular notion that technical progress of the labor-saving variety tends to swell the ranks of the unemployed. Those who believe that market forces tend automatically to bring the economy back, if not to "full employment," at least to a fairly stick "natural rate of unemployment" seem inclined to believe that this process will wipe out any joblessness created by technical change, presumably with some modest delay. The Keynesian approach suggests (subject to some recent concessions to the notion of the natural rate of unemployment) that the level of employment can be adjusted by macroeconomic policy and that this is capable of undoing whatever jobless ness labor-saving innovation may engender. We will argue here that there is more substance to the public's fears that new productive techniques can threaten jobs than is acknowledged by these lines of analysis. We will suggest that when technical progress is a continuing process a speedup of change can have two profound employment effects. First, it can increase, perhaps materially, what used to be referred to as "frictional unemployment," thereby raising the natural rate of unemployment commensurately. Second, because of the sunk-cost attributes of the retraining of workers to enable them to use the constantly-emerging novel techniques, speedup of technical change, rather than even-handedly leading to brief periods of unemployment to all of the workers affected, tends to single out three classes of workers, the ill-educated, the older former jobholders and women, particularly of childbearing age, either for declining relative wages for protracted and possibly for lifetime unemployment. There is, of course, a considerable body of writings on the social costs of economic growth. By and large it has emphasized the externalities generated by the growth process -- crowding, damage to the environment, psychological tens
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • William J. Baumol & Edward N. Wolff, 1996. "Protracted Frictional Unemployment as a Heavy Cost of Technical Progress," Economics Working Paper Archive wp_179, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_179
    as

    Download full text from publisher

    File URL: http://www.levyinstitute.org/pubs/wp179.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Avner Ahituv & Joseph Zeira, 2011. "Technical Progress and Early Retirement," Economic Journal, Royal Economic Society, vol. 121(551), pages 171-193, March.
    2. Georg Westermanna & Holger Schaeferb, 2001. "Localised Technological Progress And Intra-Sectoral Structures Of Employment," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 10(1), pages 23-44.
    3. Karl Widerquist & Michael A. Lewis, 1997. "An Efficiency Argument for the Guaranteed Income," Economics Working Paper Archive wp_212, Levy Economics Institute.
    4. Vegard Skirbekk, 2004. "Age and Individual Productivity: A Literature Survey," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 2(1), pages 133-154.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elizabeth Dunn (email available below). General contact details of provider: http://www.levyinstitute.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.