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The Effect of Digitalization on the Labor Market

  • Christian BührerEmail author
  • Christian Hagist
Chapter

Ideas in Brief

Digitalization has opposing effects on labor markets. Although the overall pie might grow bigger, severe structural changes and therefore challenges for society at large will definitely occur. For this reason, we want to address the following questions: How will digitalization change the division of work? Which jobs are at stake? And will demography be a factor in this regard? In economic textbooks, we normally assume that new technology drives growth and therefore has also a net positive impact on employment. For the past, this was certainly true, as the replacement of the typewriter by personal computers still required a person behind a desk, which now however could offer more and better services. This relationship between technology and the labor market might be about to change in our digitalization era. Already today, some news are written by the computer itself—without human fingers typing. The new feature of this technological change is therefore that not only muscle but also brain work will be replaced by robots—given it is not only technological feasible but also cost-efficient. In addition to the general change by digitalization of work processes, it could be the case that societies have to react differently to this ongoing process given their demographic transition and their education system. Research suggests that the conflict will not only evolve between capital and labor but also between young and old workers, as rationing will disproportionately affect the young. Perplexedly, it might even be the case that rapid aging countries like Japan or Germany will have less problems regarding the labor market.

Keywords

Demography Digitalization Labor market Long-term Smart machines 

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Copyright information

© The Author(s) 2017

Authors and Affiliations

  1. 1.Chair of Intergenerational Economic PolicyWHU – Otto Beisheim School of ManagementVallendarGermany

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