Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 294: Technological Change and Wage Polarization – The Illiberal Populist Response

Jonas Grafström ()
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Jonas Grafström: The Ratio Institute, Postal: The Ratio InstituteP.O. Box 5095SE-102 42 StockholmSweden

Abstract: The purpose of this paper is to discuss populist actions that are expected follow technological change on the labor market.1 The causes and consequences of possible technological unemployment will be addressed and to what extent it could be expected that the rapid technological change leads to unemployment (or that the labor market adapts in a similar way to previous technological changes as has been seen in history so far). A transforming labor market will constitute challenges for the future – possible wage polarization and heterogeneous distribution of unemployment in the labor force might create a demand for policy solutions that have an illiberal direction. In the paper it will be argued that the threat of populism will come from a disgruntled middle class rather than as commonly believed the poorer strata of the wage distribution.

Keywords: Technological change; unemployment; labor markets

JEL-codes: J20; J21; O10

12 pages, December 4, 2017

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