COMPUTERS, GLOBALIZATION, AND THE AMERICAN WORKER: WHICH POLICIES WILL CREATE JOBS IN THE FUTURE? Chinhui Juhn Henry Graham Professor of Economics University of Houston

I. SOME BAD NEWS

Trend in Civilian Employment has Reversed

Employment is Falling for Men, Especially Among the Less Educated

Labor Share of National Income is Falling

And the Dynamism? John Haltiwanger, “The U.S. Labor Market is Still Anemic Two Years After the End of Recession”

II. TWIN THREATS Technology Globalization and Trade

Computers and Tasks RoutineNon-Routine AnalyticalRecord-keeping Calculation Repetitive customer service (e.g. bank teller) Forming/testing hypotheses Persuading/selling Managing others ManualPicking and sorting Repetitive assembly Janitorial services Home health care Motor vehicle operators Autor, Levy, Murnane, Quarterly Journal of Economics, 2003, Table 1

And now there is the Google Car…

Globalization and Trade

Since 1990, and especially since China joined the WTO in 2000, low-wage country share in U.S. imports grew from 3% in 1991, 12% in 2007 In a recent paper, Autor, Dorn, and Hanson (2013) estimate that import competition can explain up to one- fourth of the decline in U.S. manufacturing employment Alan Blinder estimates that close to 30% of U.S. jobs are potentially off-shoreable (World Economics, 2009)

IV. WHAT POLICIES? Education Immigration

Early Childhood Programs Work The Perry Program in the 1960s showed that intense intervention yields high return (6-10% return per dollar cost (Heckman, et. al, 2010)) Head Start, a large-scale public program, is also effective Closes the test gap by about 1/3 when measured at age 5 Long-term effects on high school graduation and crime If include reductions in crime and welfare benefits, easily pass the cost-benefit test Often the impact is on non-cognitive skills such as motivation, self-esteem, locus of control

Return to Investment in (Human) Capital

V. SURPRISING BUT IMMIGRATION CAN HELP

International Migration is on the Rise

High Concentration of Skilled Immigrants in STEM

Immigrants Boost Innovation and Job Growth Immigrants patent at higher rate than natives (Gauthier- Loiselle and Hunt (2010)) Raising the cap on H-1B visas boost patent activity (Kerr and Lincoln (2009)) Immigrants are more likely to start their own businesses (Fairlie 2010) Forty percent of Fortune 500 companies were founded by immigrants or their children (Partnership for a New American Economy)

What about Low Skilled Immigration? Evidence is mixed with some finding small to no impact on natives and others finding larger effects Key question is whether immigrants substitute for or complement natives More recent work that takes account at detailed occupation level where immigrants and natives work find that immigrants complement natives (Peri and Sparber (2009)) and actually raise native wages

To Conclude… “If you invest in the American worker, the jobs will come.”