The 2017 World Trade Report examines how technology and trade affect employment and wages. It analyses the challenges for workers and firms in adjusting to changes in labour markets, and how governments can facilitate such adjustment to ensure that trade and technology are inclusive.

The World Trade Report 2017 discusses the effects of international trade and technological progress on labour market outcomes. It aims to provide an objective and balanced, research-based assessment of these effects in developed and developing countries and to inform readers about possible policy responses to adjustment problems and distributional effects, regardless of their sources. It is part of the response of the WTO to the current anti-trade rhetoric fuelled by concerns that trade may cause job losses and raise inequality.

Why the United States lags behind other industrialized countries in sharing the benefits of innovation with workers and how we can remedy the problem. The United States has too many low-quality, low-wage jobs. Every country has its share, but those in the United States are especially poorly paid and often without benefits. Meanwhile, overall productivity increases steadily and new technology has transformed large parts of the economy, enhancing the skills and paychecks of higher paid knowledge workers. What’s wrong with this picture? Why have so many workers benefited so little from decades of growth? The Work of the Future shows that technology is neither the problem nor the solution. We can build better jobs if we create institutions that leverage technological innovation and also support workers though long cycles of technological transformation. Building on findings from the multiyear MIT Task Force on the Work of the Future, the book argues that we must foster institutional innovations that complement technological change. Skills programs that emphasize work-based and hybrid learning (in person and online), for example, empower workers to become and remain productive in a continuously evolving workplace. Industries fueled by new technology that augments workers can supply good jobs, and federal investment in R&D can help make these industries worker-friendly. We must act to ensure that the labor market of the future offers benefits, opportunity, and a measure of economic security to all.

New technologies can both substitute for and complement labor. Evidence from structural vector autoregressions using a large global sample of economies suggests that the substitution effect dominates in the short-run for over three-quarters of economies. A typical 10 percent technology-driven improvement in labor productivity reduces employment by 2 percent in advanced economies in the first year and 1 percent in emerging market and developing economies (EMDEs). Advanced economies have been more affected by employment-displacing technological change in recent decades but the disruption to the labor market in EMDEs has been more persistent. The negative employment effect is larger and more persistent in economies that have experienced a larger increase, or smaller fall, in industrial employment shares since 1990. In contrast, economies where workers have been better able to transition to other sectors have benefited more in the medium run from the positive "income effect" of new technologies. This corresponds with existing evidence that industrial jobs are most at risk of automation and reduced-form evidence that more industrially-focused economies have tended to create fewer jobs in recent decades. EMDEs are likely to face increasing challenges from automation as their share of global industry and production complexity increases.

While adoption of new technologies is understood to enhance long-term growth and average per-capita incomes, its impact on lower-skilled workers is more complex and merits clarification. Concerns abound that advanced technologies developed in high-income countries would inexorably lead to job losses of lower-skilled, less well-off workers and exacerbate inequality. Conversely, there are countervailing concerns that policies intended to protect jobs from technology advancement would themselves stultify progress and depress productivity. This book squarely addresses both sets of concerns with new research showing that adoption of digital technologies offers a pathway to more inclusive growth by increasing adopting firms’ outputs, with the jobs-enhancing impact of technology adoption assisted by growth-enhancing policies that foster sizable output expansion. The research reported here demonstrates with economic theory and data from Argentina, Brazil, Chile, Colombia and Mexico that lower-skilled workers can benefit from adoption of productivity-enhancing technologies biased towards skilled workers, and often do. The inclusive jobs outcomes arise when the effects of increased productivity and expanding output overcome the substitution of workers for technology. While the substitution effect replaces some lower-skilled workers with new technology and more highly-skilled labor, the output effect can lead to an increase in the total number of jobs for less-skilled workers. Critically, output can increase sufficiently to increase jobs across all tasks and skill types within adopting firms, including jobs for lower-skilled workers, as long as lower-skilled task content remains complementary to new technologies and related occupations are not completely automated and replaced by machines. It is this channel for inclusive growth that underlies the power of pro-competitive enabling policies and institutions—such as regulations encouraging firms to compete and policies supporting the development of skills that technology augments rather than replaces—to ensure that the positive impact of technology adoption on productivity and lower-skilled workers is realized.

Changes in the labour market demand new solutions to mitigate the potentially dramatic wiping away of jobs, and this important book offers both analysis and suggestions for change. Bent Greve provides a systematic and vigorous assessment of the impact of new technology on the labour market and welfare states, including comprehensive analysis of the sharing and platform economies, new types of inequality and trends of changes in the labour market.

Nobel Prize winner Stiglitz focuses on policies that truly work and offers fresh, new thinking about the questions that shape the globalization debate.

In recent decades, the global economy has experienced a profound transformation due to trade integration and technological progress as well as important political changes. This transformation has been accompanied by significant positive effects at the global level, as increased trade integration has helped to raise incomes in advanced and developing economies, lifting millions out of poverty. At the same time, it has translated into changes experienced by individuals, companies and communities. While overall, better job opportunities are on the rise, workers who are forced to leave their existing jobs may find it difficult to share in these improvements. Policies aimed at facilitating adjustment can reduce the number of those left behind by trade or technology, while at the same time raising the net gains from these developments, improving overall efficiency and boosting incomes. Given the role of skills in productivity and in trade performance as well as in access to employment and wage distribution, a strong emphasis on skills development is vital for both firms and workers. This publication argues that in the current fast-changing context of globalization, where technology and trade relations evolve rapidly, the responsiveness of skills supply to demand plays a central role not only from an efficiency perspective, but also from a distributional perspective. Featuring results from the ILO's Skills for Trade and Economic Diversification (STED) programme, this report shows that appropriate skills development policies are key to helping firms participate in trade, and also to helping workers find good jobs. Co-published with World Trade Organization.