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- Title
INSTITUTIONAL FRICTIONS AND TECHNOLOGICAL UNEMPLOYMENT.
- Authors
Hansen, Alvin H.
- Abstract
The article focuses on issues related to technological unemployment. It is viewed that technological improvements permanently displace labor. The solutions lie in the direction of shorter hours of work, more rigid elimination of juvenile labor and the pensioning of older workers. Reduction in the cost per unit of output by labor-saving improvements leads either to lower prices to consumers or to higher profits for employers. It is observed that labor-saving improvements cannot permanently cause unemployment in the long run. Thus it is argued that labor-saving improvements release purchasing power and so reabsorb displaced labor. The circumstances under which the displaced labor will be reabsorbed are examined. If inspite of labor-saving improvements, the prices are not reduced, the employers would be the gainers. However, their gain would be offset by the loss suffered by the displaced workers, thus the net increase in purchasing power will be zero. It is observed that monopoly power could limit the total output of goods and thereby the employment of labor.
- Subjects
TECHNOLOGICAL unemployment; DISPLACED workers; WORKING hours; PROFIT; EMPLOYERS; EFFECT of technological innovations on labor supply; PURCHASING power; COST of living; ECONOMIC indicators
- Publication
Quarterly Journal of Economics, 1931, Vol 45, Issue 4, p684
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883249