Introduction
The chosen article in this paper is titled “The Impact of Technological Innovation on the Future of Work” by Maarten Goos and his colleagues. Since the beginning of the 21st century, significant technological developments have occurred worldwide, leading to many changes in the labor market. As per Goos et al. (2019), organizations are increasingly inclined towards technology-based operations.
Consequently, the demand for human labor is expected to decrease drastically. The article points out that digitalization has enabled machines to perform tasks previously exclusive to humans. This paper delves into how technology will impact future work by exploring seven key concepts from chapters in Mankiw’s Principles of Macroeconomics (2022), based on the findings by Goos et al. (2019).
Article Analysis
The article explores the interplay between the rapid advancements in technology and the future of work. The authors acknowledge that people have warmly embraced technological innovations, which may replace humans with machines to enhance organizational processes. They begin by analyzing previous research from experts on how technology affects work, offering a comprehensive overview of differing perspectives. Their analysis exemplifies how adopting technology and AI would affect various industries and occupations (Goos et al., 2019). Therefore, there must be a focus on the current skill requirements for workers to keep up with the new technologies and the need for lifelong learning and skill development.
In the article by Goos and colleagues, the issue is how technology will change work in the future. The literature review conducted at the beginning of the article shows that technology has significantly influenced how people work. For instance, it notes, “so far recent technological change has had little effect on the aggregate number of jobs but leads to significant restructuring of jobs” (Goos et al., 2019, p. 1). This means that technological development in the current labor market has brought shifts in skill requirements, requires organizational change that aligns with it, and induces alternative work arrangements. The introduction of these alternative work arrangements shows how the future of work is anticipated to change, which will have both opportunities and challenges.
The authors’ point of view in this article is that even though technological developments have positively changed people’s lives, they have recently raised concerns about the displacement of workers, changes in the required skills, and inequality in income. For instance, one study suggests that “cars, airplanes, medical devices, financial transactions, and electricity systems all rely on more computer software than they ever have before” (Wolff, 2021, p. 1). However, Goos et al. (2019) note that as many firms adopt these new technologies, workers will need the required skills to control and operate them, and those who fail will end up unemployed. Therefore, the future of work is at stake as the world continues to experience significant technological developments.
To substantiate their opinion, this article’s authors present an objective point of view about the effect of technological development on the future of work. For instance, they use empirical evidence, economic analysis, and case studies to offer examples of industries that have adopted technologies to change manufacturing, customer service, and transportation processes. Additionally, the article offers solid evidence of job polarization, proving that the new technologies have negatively affected work today and reduced the number of middle-skilled jobs. The article has incorporated many studies that have estimated the percentage of jobs affected by the innovations. Therefore, it highlights the need for continued employee upskilling and lifelong learning in different careers.
Expanding on the Key Concepts in Principles of Macroeconomics
Labor Market Structures
The first concept from the course is labor market structure, which is covered in Chapter 1, “The Data of Microeconomics.” According to this chapter, the employment rate in a society directly influences the economy’s strength (Mankiw, 2022). When more people are employed, they significantly contribute to and strengthen the economy. Based on the article by Goos et al. (2019), technological innovations will make many people unemployed and increase wage inequality among those employed, significantly affecting the economy’s strength. Therefore, the article aligns with the concept of labor market structures, suggesting that technological innovations’ impact on work also puts the economy at stake.
Unemployment Rate
The second economic concept introduced in the coursebook is the unemployment rate in Chapter 2. The unemployment rate indicates the number of employees seeking jobs but cannot secure them (Mankiw, 2022). In Goos et al. (2019), technological development is expected to render many people unemployed. Many future organizations will replace workers with technologies to increase their productivity and performance (Goos et al., 2019). Technological development will make most employees’ skills outdated, hence becoming worthless.
Supply and Demand
The other key economic concepts in the course book are supply and demand, as shown in Chapter 1, “The Science of Microeconomics.” This chapter indicates that, at any point, business organizations often want to ensure equilibrium in the market (Mankiw, 2022). This means that the goods and services they produce must meet customers’ demand.
Goos et al. (2019) also examine a similar concept in their study, as they indicate how technology will influence work in the future. Technological development will affect the labor market’s supply and demand changes. When new technologies such as AI are introduced in organizations, different job positions will start demanding specific skills, which may render the current ones useless, leaving many employees needing jobs (Goos et al., 2019). However, many organizations will highly demand a few employees with the required skills.
Fiscal Policy
The next economic term in the course book is fiscal policy, as described in Chapter 4, “The Monetary System.” According to this chapter, fiscal policy refers to decisions made by the government on spending and taxation within a given jurisdiction (Mankiw, 2022). Today, many countries are dealing with hyperinflation, which is significant due to the excessive supply of money in an economy (Subramaniam & Masron, 2022). To keep up with this, Mankiw (2022) notes that the government must focus on fiscal policy.
Similarly, Goos et al. (2019) note that the negative effects of technology on work call for fiscal policy changes. Governments must consider implementing the right policies, such as income support, training initiatives, and increasing investment in research and development, to help the economy grow, even as many people are expected to lose their jobs due to technology.
Business Cycle
The business cycle is another economic concept discussed in Chapter 10 of the course book. According to the chapter, the business cycle fluctuates different economic activities within a given period. This article notes different facts about the business cycle, such as unemployment, GDP components, and many other economic indicators (Mankiw, 2022).
This directly relates to the study by Goos et al. (2019), which focuses on the future effects of technology on work. New technologies can negatively affect the business cycle as they impact employment levels, the organization’s productivity, and the economy’s strength. Therefore, these technologies affect employment rates and influence economic fluctuations.
IS-LM Model
The other economic concept in the coursebook is the IS-LM model, introduced in Chapter 12. Economic professionals often utilize the IS-LM model to investigate the relationship between the goods and money markets (Mankiw, 2022). Since Goos et al. (2019) suggest that technology will affect work in the future, it will significantly influence productivity, shareholders’ decisions to invest, and customer consumption patterns. Ultimately, this will affect the IS-LM model.
Gross Domestic Product
The use of Gross Domestic Product (GDP) to measure economic activities is another concept introduced in the course book in Chapter 2. GDP indicates the total value of products and services produced within a nation (Mankiw, 2022). In Goos et al. (2019), the effect of technology on work will also ultimately impact the growth of a nation’s GDP. Technology at work will affect productivity, which has a direct impact on GDP.
Conclusion
In conclusion, Goos and colleagues’ study has effectively examined the challenges that employees will face in the future due to technological innovations. By analyzing seven concepts from the coursebook Principles of Macroeconomics by Mankiw, Goos et al. offered an insightful view on the future influences of technology on work, including job displacement and income inequality among workers with different skills. This article is right in its view on technology, as previous studies have indicated that it has already led to the restructuring of jobs. Therefore, if this continues, future work will be affected, and ultimately the economy.
References
Goos, M., Arntz, M., Zierahn, U., Gregory, T., Gomez, S. C., Vázquez, I. G., & Jonkers, K. (2019). The impact of technological innovation on the future of work (No. 2019/03). JRC Working Papers Series on Labour, Education and Technology. Web.
Mankiw, N. G. (2022). Principles of Macroeconomics. Cengage learning
Subramaniam, Y., & Masron, T. (2022). Does excessive degrees of financial depth push hyper-inflation? Asian Journal of Economics and Banking ahead-of-print, 6(3). Web.
Wolff, J. (2021). How Is Technology Changing the World, and How Should the World Change Technology? Global Perspectives, 2(1), 27353. Web.