Effects of Technological Development on Skilled and Unskilled Labor

From Dickinson College Wiki
Revision as of 16:29, 17 April 2006 by Shoemakb (talk | contribs)
Jump to navigationJump to search
  • Introduction

Improvements and developments in technology have been present throughout human history. From medieval times with improvements in siege weaponry to the latest computer developments, technology has always advanced hand in hand with human history until decent decades. Starting in the early to mid 20th century, an explosion in technological developments related to both World Wars created a myriad of new jobs for both "skilled labor" such as engineers and weapons designers as well as jobs for "unskilled labor" such as assembly line workers. This job explosion threw the United States economy into high gear.

During the 1950's people became concerned that the rise in automation in factories and businesses would lead to massive unemployment as machines replaced unskilled labor assembly line positions. Obviously, this doomsday of unemployment never surfaced to the feared levels people predicted, but in the decades that followed, a continuing debate emerged as to whether or not the current rapid rate of technological development has a beneficial influence only on skilled labor while leaving unskilled labor behind.

Description


Technology and Business



Unskilled Labor




Skilled Labor



Empirical Study


  • Effects of Immigration

Immigration directly affects the supply of low skilled labor through the influx of people both legally and illegally from low income areas like Mexico. The presence of these immigrants affects both the supply and demand for both skilled and unskilled labor. While developments in technology raise demand for high-skilled laborers, the demand for low skilled workers dramatically falls with increased immigration from low wage developing countries driving up the supply of low skilled workers. These workers are willing to work for lower wages than most American-born workers, thus driving down the wages of Americans in the bottom income bracket.

This fall in the wages for unskilled labor is extremely significant. Krugman estimates that without the influx of Mexican immigrants to the United States, the average yearly earnings for high school dropouts would be 8% higher.

Another negative effect such a large flow of low skilled workers has had on the economy is the negative return the economy gets from these workers. If the workers are paying taxes, in many cases this does not cover the costs of offering the workers education and other social services. Krugman highlights a disturbing statistic that the entire net benefit to the American economy from immigration since 1980 is only a fraction of one percent.

All immigration is not detrimental to the US economy. Unfortunately, it is mostly only high-skilled immigrants such as engineers and software technicians that are very economically valuable. It is clear that technological developments in the last 50 years have best served the interests of more highly skilled laborers.