Income disparity has widened further during the pandemic with the rise of automation, but whether a universal basic income may be a solution cannot be certain due to a shift in job skills, said 2020 recipient of the Nobel Prize in Economic Sciences Paul Milgrom.
“We have already seen a considerable growth in the earnings gap over the last two decades, and the pandemic accelerates this trend” said Stanford University professor Milgrom during a live Q&A session at the 22nd World Knowledge Forum held in Seoul, Korea on Tuesday. Another driver to this polarization is artificial intelligence, he pointed out, which creates high-paying jobs in the tech sector, whereas low-wage workers are replaced by robots.
To address the problem, a universal basic income (UBI) could be an answer, Milgrom agreed. “The UBI will be going to grow and become important. If human labor will be redundant with the growth of a permanent impoverished class, then we will have to make some changes like the universal basic income policy.”
But he was cautious about how it will develop, noting that the government-guaranteed payment for every citizen is still being tested in countries. “Time will tell. It`s a little early to make a full call on this,” said Milgrom.
He noted that the rise of new technologies has threatened traditional jobs but at the same time has created new jobs.
Milgrom warned that current supply disruptions may continue to play out throughout next year despite a sharp economic recovery boosted by state spending and market reopening, which would bring a permanent change to the global supply chain networks.
“We will continue to see some temporary and permanent changes as well, and our adjustment to the pandemic will take time. Companies are now seeking more robust and resilient networks to address supply chain vulnerabilities, and this is going to involve some permanent changes.”
Touching on the global inequality in vaccine distribution between advanced and poor countries, the professor, best known for his contributions to the theory of auctions, said a market design cannot bring efficiency to vaccine supply, adding “it is a matter of politics not economy and therefore we have to get people comfortable with sharing quickly.”
By Minu Kim
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