Conference Report: European Labor Markets - Mastering Technological and Structural Change

Sunny days and tight labor markets have something in common: they don’t trigger an urge to repair anything. But just as a sunny day is better for fixing the roof, instead of climbing on slippery slates during a downpour, tight-labor periods are good for preparing for more turbulent times ahead. And turbulence is definitely coming to a labor market near you.

That was the purpose of the Pillars conference in Brussels last July: to explore how to master that looming turbulence—aka structural and technological change—on the European labor markets’ horizon. To do that properly, on its first day it cast a highly critical view on the research the Pillars warriors have already carried out, and on the second discussed insights, policies and strategies with EU labor market experts.

The critical review part devoted eight sessions to a take-no-prisoners scrutiny of the interim results of the various research groups.

The sessions kicked off with findings on the interplay between technology, skills, and regional development. Chaired by multilingual and multitalented Maria Savona (U. of Sussex), it featured an online presentation by Mariagrazia Squicciarini (UNESCO), which examined how AI can be enlisted to ensure a more inclusive future, which inevitably touches upon ethics issues associated with the training of AI and its subsequent deployment. A hot topic.

Morgan Frank (U. of Pittsburgh) tackled a vast but related area: how the complexity of artificial intelligence and the socio-economic consequences of technological change will affect the future of work. Florencia Jaccoud, who works with Tommaso Ciarli, at first surprised many with the message that low-tech EU regions suffer less from technological change, until she explained how technology waves, while enhancing the economic performance of regions, also can exacerbate regional differences: those low-tech regions, by being less affected by change, tend to fall behind. Ron Boschma, finally, raised awareness to the fact that smart growth can lead to increasing regional income disparities, at the expense of inclusive growth, since smart growth tends to focus on more complex industries and not all regions have the same capacity to diversify into such industries.   

The parallel session focused on a staple of forward-looking labor market analysis: the role of skills and their expected metamorphosis in the coming years. Chaired by Simon Wiederhold (Catholic University of Eichstätt-Ingolstadt), it reviewed work by the doyen of the economics of education, Eric Hanushek (Stanford), who went to the bottom of the issue by highlighting the immensity of the global skill deficit, as two-thirds or more of the world’s youth do not reach even basic skill levels. If this basic universal level were reached, he said, future world GDP would increase by $700 trillion over the remainder of the century. Now digest that. (Video interview Eric Hanushek)

Simon then presented his findings on the link between apprenticeship plans and the value of skills, from an ongoing research project he is conducting together with Christina Langer.

Emilie Rademakers (Utrecht University) pointed out that task overlap across jobs is unimportant for worker mobility between job markets. Technological progress that automates routine tasks imposes substantial adjustment costs that are highly unevenly distributed across unemployed jobseekers with routine versus non-routine task competencies. Bledi Taska (Burning Glass Technologies, now renamed Lightcast) showcased how his company’s expertise in applying AI to produce big data analytics can shed light (sorry, cast light) on the diffusion and adoption of AI across Europe. (Video Interview Bledi Taska)

The next session was more eclectic. Chaired by Pillars Coordinator Oliver Falck (ifo Institute), it featured Álvaro Lalanne (UN-ECLAC), who explained how Uruguay, a Latin American poster child for both social policies and covid management, handled the pressures of simultaneous technological and pandemic disruption. Matteo Sostero (European Commission Joint Research Centre) presented his work on what online job ads reveal about occupational task profiles, while Florian Lehmer examined the effects of the EU’s Emissions Trading System on career paths. Basically, workers in occupations with climate-harmful tasks face disadvantages in wage growth and cumulative earnings, while the opposite applies to those with climate-friendly tasks.

The impact of technology on the future of work in Europe was the topic of the parallel session, which was chaired by Tommaso Ciarli, another multilingual prodigy (UNU-MERIT and Sussex). It had a definite World Bank flavor, with all three presenters hailing from that multilateral organization. They deftly covered equity implications, effects on growth, vocational education and demand for skills as technologies are adopted, in particular as some technologies tend to hollow out the middle-skill segment, and they outlined their ongoing project to guide policymaking in this regard.

The next batch of parallel sessions saw another one chaired by Tommaso Ciarli. It dealt mainly with exposure to automation, ranging from how to estimate such exposure in the first place (Ekaterina Prytkova, Sussex, who involuntarily had to present online), through AI adoption in the US (Kristina McElheran, U. of Toronto, also online), to direct measures of exposure to labor-saving automation (Jacopo Staccioli, Catholic University of Milan). Cath Sleeman, in turn, tackled a key issue that underlies any attempt to understand labor markets in general: labor market intelligence. She focused on the UK, where her institution, Nesta, is doing remarkable work that is beginning to be emulated far and wide around the world.   

A further session, chaired by Panu Poutvaara (ifo Institute), a trusted hand in international institutional and economic comparisons, delved into the effects of technological change on migration. Presenters included Britta Rude (ifo Institute), with first-hand experience in Latin America, Joop Adema (ifo Institute), and Ernest Miguélez (Université de Bordeaux, CNRS). Britta looked into the effects of technology on inequality between locals and immigrants in the host country, finding that the latter often lose out due to unequal access to institutions and other such constraints (Video interview Britta Rude). Joop found some interesting linkages between access to smartphones in some African countries and an enhanced desire, and successful realization, of the decision to emigrate. Ernest presented an interesting take on the effects that the mobility of inventors can have on economic development.

And, modern as we all are at Pillars, Internet data (lots of it) could not be left aside. The session devoted to how this kind of data can help to predict the labor market, led by Oliver Falck, had Hani Mansour presenting his ongoing work on offshoring and demand for skills. (Here, he could well exchange views with Maria Savona, who is doing remarkable work on offshoring as opposed to farsharing, a cool new concept in the field.) Then, the researcher with the conference’s most unpronounceable name, Séin Ó Muineacháin (who incidentally did run into someone who could pronounce it like a pro, our own Deirdre Weber), used his LinkedIn insider expertise to produce the platform’s Global Green Skills Report. Cool stuff. Not to be outdone, Ben Zweig (Revelio Labs, New York), brandished his 100 Terabyte bazooka to glean insights about attrition. Also cool. (Video Interview Ben Zweig) And Christina Langer (Catholic University of Eichstätt-Ingolstadt) did not count the bytes, but the vacancy ads, all 64 million of them, that she trawled to predict what might happen to working from home in the wake of the covid pandemic. And she did it from home. Presumably.

The final parallel session, chaired by Lisandra Flach (ifo Institute), featured Ariell Reshef (CNRS – Centre National de la Recherche Scientifique, Paris), Isabella Gourevich (ifo Institute), Jens Südekum (Heinrich-Heine University, who got omicroned and had to Zoom in), and lots of robots. Among other robotic themes, the presenters looked at the effects of technological change in general, and automation, robotization and the like in particular, on the entire global value chain. It turns out that when you automate here, you create ripples along many links in the chain. Thus, for instance, when OECD countries adopt robots, Latin American exports can immediately take a hit. Jens, in turn, speaking like Big Brother through a screen, told of the Rise of Superstar Robots. No, wait. Robots and the Rise of European Superstar Firms. But exciting, nonetheless.

The second day of the conference, devoted to policy issues and with the participation of EU experts, is covered in the videos below.