Anthony Barnes Atkinson is the author of the book ‘’Inequality’’ that sets out fifteen proposals to reduce inequality. I will be evaluating two of these proposals and ways in which achieving these proposals will help to reduce inequality. The first proposal I will be evaluating concerns technological change and the importance of maintaining human capital despite the growth in technology. The second proposal I will be evaluating is the effect of reducing unemployment through public employment and minimum wage. Both proposals are set out to reduce inequality but to what extent will they work or make a difference?
The first proposal by Atkinson suggests that the rate of growth of technology and artificial intelligence is increasing unemployment in various sectors. In other words, in order to solve inequality, we need to innovate and improve our production outputs using and maintaining human labour as opposed to solely relying on technology.
First of all, advances in information technology have undoubtedly increased the demand for skilled workers pushing us into a world of K – intensive economies that are highly automized in their ability to produce goods and services. While we are finding new innovative ways to produce goods and services, there has been a decline in the demand for unskilled workers and an increase in unaided capital. Many arguments suggest that investments in robots provide higher quality to the production of our goods and services. A knock-on effect of this is the initial rise in employment as there in an increase in demand for workers to be highly educated to contribute to the innovation of artificial intelligence and technology. Additionally, Atkinson states that less political drama concerning trade unions and strikes would take place as there is less human interaction meaning a constant high quality of production would take place increasing possible production possibilities for an economy. However, Atkinson possesses a concern when it comes technological changes and understands that there should be a concern as to how this is affecting citizens employment and inequality. Instantly, one of the issues that policy makers are not considering is the lack of human contact. Many professions require communication such as the health care industry or education. In the event of growing technological change, is society leaving room for human interaction? If so, should we limit technological change in some sectors in order to control the amount of human interaction that is integral to our personal health and education? Aside from this, the concept of growing inequality is highly apparent as growing technological changes leaving unemployment a high risk for those with mid – level skills. Due to this, income inequality is rising due to a gap between those highly skilled workers through manual intervention and between those who are not needed for jobs that technology is occupying. How do we ‘encourage innovation in the form that increases employability’? First of all, policy makers need to accept the rising inequality technology creates due to the skill bias nature leading to structural unemployment and geographical immobility. However, if policy makers understand the need for increasing employability of workers alongside growing technology, then measures can be put in place to educate and train workers so they can have the opportunity to become geographically mobile or more skilled in the event of growing technological changes. This can be done by training workers to become more versatile and skilled so they can adapt to change in technological production. This enables an economy to sustain employment and encourage a highly skilled workforce that can develop transferrable skills across various sectors.
A second proposal Atkinson suggests to reduce inequality is that ‘’the government should adopt an explicit target for preventing and reducing unemployment and underpin this ambition by offering guaranteed public employment at the minimum wage to those who seek it’’ (Atkinson, 2015). This proposal is an attempt to bridge the gap between the employed and unemployed by ultimately making sure all citizens are paid a wage. This increases fairness and allows all citizens to have access to their own disposable income leaving less of a need for government intervention and benefit schemes. This also boosts local and regional economic growth as people are given the opportunity to work and therefore earning a minimum wage incentivises them to work. Guaranteed public employment reduces the rate of unemployment thus helping to control the macroeconomic objective of stabilising unemployment while also injecting money back into the economy through consumer spending. On top of this, the proposal of offering employment at minimum wage increases social stability within an economy meaning workers will be motivated to increase their skill and training over time to ensure a stable income which then ultimately boosts employment and skill within an economy which can then contribute to the growing human capital and intelligence that is fundamental to reducing inequality. This is because the government are giving all citizens an equal opportunity to earn a wage and become skilled in a certain sector. This increases worker confidence and therefore bridges the gap between those who are employed and those who are unemployed.
Ensuring citizens that are employed and earning a minimum wage allows for people to join the labour market and offer their labour is return for income and wealth. Narrowing the gap between the employed and the unemployed evens the distribution of income and also improve labour productivity and efficient which directly correlates to the supply of goods and services an economy holds which then contributes to other macro-economic objectives such as GDP and international trade.
To conclude, the two proposals I chose to discuss have evidence to support that they will contribute to a reduction of inequality. Making sure there are jobs for human capital alongside new technology through training, education and human interaction allows the workforce to stay employed, build transferrable skills and become versatile amongst all sectors. This proposal along with ensuring jobs with minimum wage ensures that the macro economic objective of unemployment is being monitored while also given citizens the opportunity to earn a healthy wage that can be injected back into the economy.