Tuesday, January 13, 2009
A Luddite is someone who is afraid of technology. Technology scares people because they don’t know how to use it. In addition, workers fear that they will be replaced. The latter is true if the technology allows the employer to produce more will less workers. Sometimes a new innovation will allow a producer to produce more with the same amount. In this case technology enhances the worker. In the long run, after all costs have been internalized, technology does not affect the natural rate of unemployment. How long and what costs are involved in this long-run adjustment?
Usually, an unemployed worker needs six weeks to find employment. If technology replaces an older worker, the costs of retraining and finding employment, might cause a pyschic cost that will make the displaced worker exit the labor market. For some workers the new technology will create new opportunities. I think the effects of technology is how workers perceive it.