National Academies Press: OpenBook

Technology and Employment: Innovation and Growth in the U.S. Economy (1987)

Chapter: Appendix D: Statement of Anne O. Krueger

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Suggested Citation:"Appendix D: Statement of Anne O. Krueger." National Academy of Sciences, National Academy of Engineering, and Institute of Medicine. 1987. Technology and Employment: Innovation and Growth in the U.S. Economy. Washington, DC: The National Academies Press. doi: 10.17226/1004.
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Page 216

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D Statement of Anne 0. Krueger Advance notification of layoffs is undoubtedly beneficial to those workers who will lose their jobs. If there were no negative side effects associated with advance notification, it would clearly be beneficial to all. There will be several side effects, however, if notification is mandatory. First, the necessary enforcement apparatus would increase the cost of doing business. Second, for all firms, but especially for risky ones, knowledge that layoffs could not be made on short notice would increase incentives to use capital and hire fewer workers. To the extent that fewer jobs would be created, the proposed requirement would hurt the employ- ment prospects of those the proposal is designed to assist. That manda- tory periods prior to layoffs can result in smaller levels of employment has been well documented in a number of developing countries. Third, requirements of advance notification reduce the flexibility of firms already in difficulty. The requirement is, in effect, the same as a tax for these firms. I conclude that advance notification is desirable, and efforts to educate employers of its value to employees should be encouraged. With respect to mandatory notification, however, I believe that the evidence is far from sufficient to warrant such a step. 216

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Will the adoption of new technologies by U.S. industry lead to widespread unemployment? Or will the resulting use of new processes and techniques, as well as the introduction of new products, open new opportunities for American workers? This volume studies the relationship of technology to employment and the effects of technological change on the workplace. The authors discuss the role of new technologies in strengthening U.S. international competitiveness, recommend initiatives for assisting displaced workers, and make recommendations to aid industry in developing and adopting the new technology it needs to compete successfully in the world economy.

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