Technical Unemployment and Policy

This paper investigates the history and future of technological unemployment, with presentation of economic theory, empirical evidence, and policy suggestions. It is found that historically the concern has always been revived when the speed of progress increased, placing human labor under threat of being left behind. However, unemployment always proved to be transitory and concerns subsided sooner or later. Still, the economic debate has never been conclusively resolved. The fundamental model “compensation theory” is disputed and modern forecasts and empirics are heavily mixed. For this reason, a shift in focus from forecasting employment towards uncertainty-incorporating policies is advocated. Innovation is unknown by nature and therefore current employer-employee relations cannot be overly relied upon to provide basic livelihood. A policy measure is suggested which attempts to embrace the uncertainty along with maintaining essential competitive forces via a more widespread ownership of capital.