Technical Change and Employment in Steel, Autos, Aluminum, and Iron Ore.
PUBLIC RESEARCH INST ALEXANDRIA VA
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Technical change, making possible increased output from existing resources, enhances the potential standard of living for society. yet in the particular industries where technical change is occurring, there are conflicting effects 1 the price of output will fall so that more is demanded and 2 the demand for some or all inputs for given output will be reduced. With respect to labor, the first effect increases demand, the second diminishes it. This paper presents estimates of the net effect of technical change on labor demand in four industries steel, autos, aluminum, and iron ore. Using an economic model of these industries which takes account of the linkages among them, we estimate what would have been the effect on employment if no technical change occurred in each since 1959. We find that if technical change had been suppressed, output and employment in two of the industries aluminum and iron ore would have been drastically reduced, largely because of an inability to compete with imports. The other two steel and autos would have suffered large drops in output, but their employment would be changed by less than 4 percent.
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