In an article in the Wall Street Journal about the effect of automation on jobs, Boston University economist James Bessen was quoted as saying that the problem is not "mass unemployment, it's transitioning people from one job to another." a. What does "transitioning people from one job to another" entail? During the transition period, what type(s) of unemployment would describe these people? b. The article noted that "other countries devote more resources than the U.S. to cushioning and retraining displaced workers." What type of policies do governments use to support displaced workers? What are the benefits and the costs to making the policies to cushion displaced workers more generous?

Step by step solution

01

Understand 'Transitioning People from One Job to Another'

Transitioning people from one job to another refers to the process of helping employees to adjust from their current job roles to new ones. This typically involves retraining and reskilling of the workers in preparation for new job roles. The process may also involve helping the workers to adapt to a new working environment- sometimes even a new industry altogether.

02

Identify Types of Unemployment during Transition

During the transition period, these people could be described as experiencing 'frictional unemployment' as they are in the process of moving from one job to another. This type of unemployment is transitional and voluntary as it occurs when workers are seeking new or better jobs or they are being retrained for new positions or industries.

03

Explain Government Policies to Support Displaced Workers

Governments use various types of policies to aid displaced workers. These can include unemployment insurance benefits, job placement services, retraining programs, counseling and financial aid for further education. All these policies are aimed at helping workers transition to new jobs and cushioning the effects of displacement.

04

Discuss Benefits and Costs of Generous Policies for Displaced Workers

Benefits of making policies to cushion displaced workers more generous include economic stability through ensuring a continuous supply of adequately skilled labor force, reducing the burden on social services, and maintaining demand through ensuring workers have a source of income during the transition period. However, costs include the financial implications of funding these policies, potential for dependency instead of encouraging active search for work, and creation of moral hazards where workers may not put adequate effort into their jobs, knowing that they have a safety net in case of displacement.

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