Page - (000068) - in Disrupted Development and the Future of Inequality in the Age of Automation

5 AUTOMATION AND STRUCTURAL TRANSFORMATION … 61 is much more sanguine about this process as he sees the “expansion of new industries or new employment opportunities without any short- age of unskilled labor.” When in Sect. 5.2, we proposed to under- stand automation along the lines of a “Lewis 2.0 model” the idea was thus to incorporate elements of both Marxian and Lewisian thinking: in light of current technological development, we may not want to reject Marx’ views on automation “on empirical grounds” quite as cat- egorically as Lewis did—even if the impact of reserve army dynamics are more likely wage pressures in the APS rather than the drastic employ- ment-destroying effects of the “automatic factory” that Marx had in mind. Lewis, on the other hand, may have been right in considering sur- plus labor primarily as an engine of structural change within a dualis- tic economy framework. Labor that is “set free” may get permanently absorbed in the ARS. The question then is whether such modern-day automation-driven structural change has equally benign effects (particu- larly under conditions of global competition and an international divi- sion of labor), as Lewis assumed traditional structural change to have, in labor-abundant Asian developing countries.9 5.4 existing empiricAl forecAsts of the employment effects of AutomAtion It is an empirical question if and in what sectors automation reduces labor demand. As was discussed, automation could reduce employment if the ARS has a low demand for labor. But if productivity gains lead to lower prices and thus higher quantities demanded, net job effects could be positive. Furthermore, the demand for new labor-intensive work could rise as the cost of labor falls relative to capital. Many would argue that the very problem of developing countries is that there is too little, rather than too much, automation and thus lower labor productivity. Table 5.1 presents a further layer to the “Lewis 2.0” model of eco- nomic development in an analytical framework to consider automation effects on employment within the two-sector model presented ear- lier. One could speak of an adaptable and a non-adaptable labor force (defined, for instance, by the skills level). One could then hypothesize the existence of two opposing forces in automation-driven structural change in the developing world: (i) labor