The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

Re-emergence of popular concern that automation technologies could create widespread, persistent unemployment Motivation for Study Could automation-driven unemployment become a significant policy problem for Canada in the near future? Introduction The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

Impact of technology on Canadian employment in the recent past? What evidence that the impact of technology will be different in the near-future? A.Establishing the issue B. Estimating the magnitude of the problem Policy problem formulation Research question Research findings C. Policy Implications Prerequisites and policy options Study Structure The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

Significant increase in industry-level capital-labour ratios No obvious long-term trend in unemployment rates OECD (2014a) 2. OECD (2014b ) Explanation Significant shift in industry-level shares of total employment Labour reallocation from industries where technology is labour-substituting to where it is labour-complementing What was the impact of technology on Canadian employment in the recent past ( )? The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS A. Establishing the Issue

OECD (2014a), author’s calculations Total change in industry share of employment ( ) The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS A. Establishing the Issue

 Falling employment in many ‘routine’ occupations  Rising employment in ‘non-routine’ occupations Empirical Evidence (1980s-2000s) 3. Autor and Dorn (2013); Beaudry, et al. (2013); Green and Sand (2014) 3 Recent Signals (2010-Present) What evidence that the impact of technology will be different in the near-future?  Automation of low-skill ‘non-routine’ occupations  Automation of some high-skill ‘non-routine’ occupations Implication Rapid and ongoing development and diffusion of automation technologies across skill distribution A. Establishing the Issue The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

Policy Problem The development and diffusion of current and near-future automation technologies could lead to historically high levels of unemployment in Canada Research Question What proportion of Canadian employment is at risk for automation in coming decades? Objectives of Analysis Employment-impact at aggregate and industry levels Employment-impact based on current and projected occupational distribution of workforce B. Estimating the Magnitude of the Problem The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

1.Occupation automation probabilities Probability inversely related to skill-content that resists automation due to ‘technology bottlenecks’ 4. Frey and Osborne (2013) 4 B. Estimating the Magnitude of the Problem The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS Risk Categories: Low (0-30%), Medium (31-70%), High (71-100%) How many Canadian jobs fall into the ‘High’ category?

2.Apply automation probabilities to Canadian employment data i.Canadian occupational employment data for 2013 ii. Canadian occupational employment projections for Calculate Automation Susceptibility Scenarios i.Maximum Employment-Impact Scenario ii.Risk-Adjusted Employment-Impact Scenario Caveat Scenarios do not factor in non-technological barriers to automation (e.g. cost, consumer preferences) B. Estimating the Magnitude of the Problem The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS

Total Employment at High Risk for Automation High Risk Employment by Occupational Grouping The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS B. Estimating the Magnitude of the Problem

Employment-Share and Proportion at High Risk (2013) The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS B. Estimating the Magnitude of the Problem

A Critical Prerequisite A comprehensive Canadian labour market information system Time-FramePolicy ChallengePotential Policy Response Short-term (10 years) Unemployment due to declining labour demand in low-skill occupations National Skills-Training Framework Medium-term (10-20 years) Unemployment due to declining labour demand across skill distribution Increased public assistance for viable SME* development Long-term (20+ years) Maintaining Canadian living standards in a context of persistently weak labour demand Broad-based redistribution programs (e.g. Universal Basic Income) Policy Responses *Small-and-medium size enterprises (5-99 employees) The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS C. Policy Implications

1.Rapidly expanding technological capabilities continue to weaken barriers to automation 2.Substantial proportion of Canadian employment appears to be at high risk for automation in coming decades 3.Characteristics of policy problem will likely change over time and will require a flexible policy response 4.Several unknowns Pace of technological change: over- or underestimated? Pace of automation: continuous or punctuated? Impact of non-technological barriers to automation on estimates The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS Conclusion

Autor, D. H., Dorn, D. (2013). The growth of low-skill service jobs and the polarization of the US labor market. American Economic Review, Vol. 103, No. 5, pp Beaudry, P., Green, D. A., Sand, B. (2013). The great reversal in the demand for skill and cognitive tasks. NBER Working Paper No Frey, C. B., Osborne, M. A. (2013). The future of employment: How susceptible are jobs to computerisation? Mimeo. Oxford Martin School, University of Oxford. Green, D.A., Sand, B. (2014). Has the Canadian labour market polarized? CLSRN Working Paper No Vancouver, BC: Canadian Labour Market and Skills Researcher Network. OECD. (2014a). STAN Database for Structural Analysis. OECD.Stat. OECD. (2014b). Short-Term Labour Market Statistics. OECD.Stat. The Employment-Impact of Automation in Canada Colin McLean, School of Public Policy, Simon Fraser University 2015 National Student Thought Leadership Award 67th IPAC National Annual Conference, Halifax, NS References