Question

There is lots of talk these days about robots taking American jobs. The idea is that although robots allow us to make things with fewer resources, and thereby lower costs, they displace some workers while providing opportunities to others (like engineers). Are robots pareto improving? If so, why? If not, what set of policy options do we have to make the robots pareto improving?

Answer 1

The use of robots in the process of production will definitely have many advantages as it will make the production process less costly as the use of resources will be reduced. Robots will also have advantage for the skilled labor workforce as it will provide various opportunities  to them. However, the idea of allowing robots to make things will not be a Pareto improving idea. The Pareto improvement can be defined as a situation when the changes does not cause harm to anyone whereas it provides benefit to at least someone. Robots will harm the unskilled labor workforce as unskilled labors will be replace form robots and skilled labors. The wages of the unskilled labors will get reduced and there will be a threat to their jobs. Therefore, the idea of using robots is not be a Pareto improvement.

To make robots Pareto improving, the unskilled labors should not be replaced rather they should be trained to work with robots or the unskilled labors should be move to other jobs in which robots can not work.