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The use of computers in the workplace has been the central force driving changes in the wages of skilled workers relative to the wages of unskilled workers.
The use of computers in the workplace has been the central force driving changes in the wages of skilled workers relative to the wages of unskilled workers.

Technology, Trade Affect Labor Markets, Wages

The development, welfare and living standards of billions of people around the world, including the poorest, are progressing at an unprecedented rate, the report says

Technology, Trade Affect Labor Markets, Wages

China, India and other emerging giants—representing one-third of humanity—are rapidly catching up with the developed world, even as the overall global economy continues to reinvent itself and race ahead, the World Trade Report 2017 said.
Released by the World Trade Organization, the report examines how technology and trade affect employment and wages, while observing that the world economy has doubled in size since 1990 in its biggest expansion in history, despite the post-2007 Great Recession, wto.org reported.
It analyses the challenges for workers and firms in adjusting to changes in labor markets, and how governments can facilitate such adjustment to ensure that trade and technology are inclusive.
“The development, welfare and living standards of billions of people around the world, including the poorest, are progressing at an unprecedented rate,” says the report. This extraordinary period of growth and development, however, has been accompanied by an equally extraordinary period of disruption.
“Whole new economies force others to adapt or decline; as the demand for more skilled, specialized or knowledge-intensive work grows across many countries and sectors, even as the demand for less skilled, more routine work shrinks,” the report says.
In the more productive, dynamic and diverse global economy, some people fall behind, says the report. It notes that the same forces that are delivering economic progress–innovation, specialization, producing more and better with less, are also delivering economic change, turnover and dislocation.
“No two forces are driving this global economic transformation more than technology and trade,” it says. It further notes that because economic openness encourages innovation, and vice versa, the two are not just related but mutually reinforcing.

New Technologies
New technologies, including fiber optics and the Internet are linking together and “hardwiring” today’s globalized economy, in turn fuelling even more openness and integration.
“China could not have emerged as the new ‘workshop of the world’ without its integration into global production networks; India would not be on track to becoming a global services hub without access to the World Wide Web,” says the report.
The report finds that labor markets have evolved in many different ways across countries, suggesting that country-specific factors play a pivotal role. It also finds that although technological advances and trade have yielded important benefits for economies overall, certain types of workers and/or regions may sometimes be adversely affected.
Although interrelated, technology, more than trade, appears to be responsible for the decreasing share of manufacturing jobs and for the declining number of middle-skill jobs relative to low- and high-skill jobs.

Key Facts and Findings
- Technological progress can assist workers, through labor-augmenting technology, or replace them, via automation. In both cases, the overall effects on the market’s demand for labor are ambiguous.
- Current technological progress has led to a higher relative demand for skilled workers and a lower relative demand for workers performing routine activities.
- The use of computers in the workplace has been the central force driving changes in the wages of skilled workers relative to the wages of unskilled workers.
- The labor force participation rate and the ratio of the population in employment have remained relatively stable across most high- and low-income countries, but have decreased in middle-income countries. Unemployment rates tend to be lower in developing countries, but the share of the population in informal employment tends to be high.
- The evolution of labor markets has been marked by the expanding proportion of workers with secondary or tertiary education, increasing participation of women in the job market, declining participation of men in employment, and the increasing number of non-standard jobs, such as work based on temporary contracts, part-time work and self-employment.
- In developed economies and some developing economies, there has been a relative increase in the share of high- and low-skilled occupations and a relative decline in the share of middle-skill occupations.
- Smooth adjustments in the labor market can be hampered by the potential mismatch between those searching for jobs and the types of workers needed by employers. Adjustment can also be hampered by the obstacles faced by employees in moving to where new jobs are located, therefore limiting the gains from technological change or trade.

 

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