The Future of Work | Are Redistribution Policies Enough?

Moderated by Rana Foroohar with Gordon Hanson and Laura Tyson

Jan 12, 2021 | 12:00 – 13:00 Download .ics


Traditional welfare systems have emphasized the need for redistribution post-production. Are these policies sufficient in the future?

The Future of Work is an INET webinar series that brings together diverse voices to discuss the impact of technology on the economy and society. We host prominent thinkers, policy-makers, and scholars from different backgrounds and countries to present and debate their views.

Summary of: The Future of Work: Are Redistribution Policies Enough?

Economic policies aimed at protecting workers have long focused on the notion of redistribution. By compensating those left behind, the idea goes, most policies can be made more equitable while keeping their efficiency intact. Past experiences, from international trade for example, have not been kind to this line of thinking. In the face of the pandemic and the oncoming digital revolution, finding ways to engage more workers productively in the economy has become one of the most urgent challenges facing policymakers worldwide today.

In the eighth episode of the Future of Work webinar series, organized by the Institute for New Economic Thinking, Laura Tyson, professor at University of California, Berkeley, and Gordon Hanson, professor in urban policy at Harvard Kennedy School, were joined by Rana Foroohar from the Financial Times in a discussion on what other policies can be deployed to prepare workers for the digital age.

Almost by all measures, the fruits of economic growth from recent decades have not been equally shared. Already since the 1970s, worker’s compensation has lagged behind increases in productivity, thanks to stagnant wages, declines in union membership, and other changes in labor markets. Trade with lower-income countries, most notably China, has had dramatic and long-lasting negative impacts on local regions that had to compete with cheaper imports, a phenomenon economists, including Gordon Hanson, dub the China Shock. And due to factors like technological changes, middle-level jobs that are key to a strong middle class are disappearing much faster than jobs at either end of the skills spectrum, posing the job polarization challenge that continues to spell trouble for the future of work. Redistribution policies alone have been insufficient and ineffective at improving the overall welfare of workers.

Growth patterns specific to this era, those relating to agglomeration and network effects in particular, have also ushered in a host of “superstars.” Be they cities, firms, or sectors, these superstars exert an outsized impact on our economies and on labor markets. Take cities for example. While the pandemic has triggered a large-scale experiment for remote work, particularly in the skilled workforce, cities have established themselves as hubs of productive activities and gainful opportunities recently. Urban centers with the “right” sectors, think technology, finance, or biotech, have continued to thrive and lift up adjacent sectors with them. Contrary to the belief that workers will move to cities where opportunities are abundant, mobility across geographical areas, especially for low-skilled labor, has not been significant. Superstar firms have similarly shifted the labor market. While their status as monopolies in goods and services markets is undergoing increased scrutiny, their ability to influence wages and the labor movement, monopsony in economist talk, has found greater appreciation. Some economists have in fact linked the rise of superstar firms with the decline of workers’ power in national income at the macroeconomic level. These emergent changes call for policy responses well beyond traditional interventions in the post-production stage.

Economists and policymakers have been researching a host of policies to achieve inclusive prosperity and keep workers in the game in this era. Creating “good jobs”—stable, formal-sector jobs with fair conditions, protection, and compensation—has been a common theme in these proposals. To this end, building a vibrant small and medium-sized enterprise sector, identifying and supporting growth sectors in the local economy, and providing adequate training and reskilling opportunities for workers are all integral elements. Specifically in view of the regional inequalities in economic performance, spatially targeted measures, including employment, infrastructure, and education policies, should be used to support socially distressed areas. Collective bargaining rights and union representation, long under attack from businesses under the banner of flexibility, remain a powerful and credible tool to ensure workers’ rights. Furthermore, from Singapore’s SkillsFuture program on targeted skills training, to Denmark’s flexicurity model that combines mobility with protection, other nations have already pioneered policies aimed at similar purposes. The challenge to create enough good jobs is global and a sustainable recovery calls for policies that prioritize the welfare of workers at a time of massive disruption.

Technology’s impacts on societies today go well beyond just work. What can we do to ensure that technology empowers, augments, rewards, and respects the majority, not the few, given its increasing defining role in future economies? The next episodes of this webinar series will continue this discussion.


Meet the leaders and scholars whose new thinking guides our work. View all speakers

  • Rana Foroohar

    Global Business Columnist and Associate Editor, Financial Times

    Steering Committee, World Economic Roundtable

  • Gordon Hanson

    Peter Wertheim Professor in Urban Policy, Harvard Kennedy School

  • Laura Tyson

    Distinguished Professor of the Graduate School , Haas School of Business at the University of California, Berkeley