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Keynes Fund


Summary of Project Plan


The labour market has been characterized by large shifts towards automation. Processing power has grown exponentially leading to great advances in artificial intelligence and applications span diverse tasks from self-driving cars to cancer detection. While these advances improve the lives and leisure of many people, they also might pose a threat to jobs of many individuals. Currently the world is suffering a pandemic due to the spread of a virus, Covid19. The reliance on human labour in production gives way to the threat of contagion. Following the current mass lay-offs underway, we therefore are likely to see further shifts towards automation driven by the substitution of robots for human labour.

The large shifts in the labour market over the past years have been accompanied by a drastically changing political landscape. Aidt and Rauh (2018, 2019) document the secular rise in political detachment and the associated decline in voter turnout. However, the main drivers of political disengagement are not yet well understood. Some evidence points towards job insecurity playing a role. Populist vote shares have risen in areas where Chinese imports increased most (Autor et al 2016, Dippel et al 2017). Also public policy has been shown to play a role, as, for instance, the austerity measures rolled out in the UK increased the Brexit vote share (Fetzer 2019).

John Maynard Keynes (1931) himself, as well as other prominent Economists and Sociologists in the past, such as Karl Marx (1867) and Leontief (1952), already predicted that labour displacement through technological advancement would lead to social and political unrest and instability. Recent studies, have provided systematic evidence for this hypothesis while looking at historical events such as the introduction of steam-powered textile mills which made spinners and weavers redundant 200 years ago (Caprettini and Voth 2019). However, we lack causal evidence as in how the recent surge in robotics and AI are impacting populism and political preferences.

This research project will not only document and contribute to our understanding of current concerns about public policies in light of changing labour markets and economic failure. It will shed light on which policies could help reduce the misalignment between the public’s political preferences and the policies proposed by politicians in order to foster political engagement of the wider society. Due to its nature, there will be no private market of insurance for job loss through job displacement. This market failure will have to be addressed by well-designed public policy.



Dr Christopher Rauh


Dr. Christopher Rauh is an Assistant Professor at the Faculty of Economics, University of Cambridge. His research interests are in Labour Economics and Political Economy.





Cambridge Working Papers in Economics (CWPE)



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