Working Paper No. 294: Technological Change and Wage Polarization – The Illiberal Populist Response

Abstract

The purpose of this paper is to discuss populist actions that are expected follow technological change on the labor market.1 The causes and consequences of possible technological unemployment will be addressed and to what extent it could be expected that the rapid technological change leads to unemployment (or that the labor market adapts in a similar way to previous technological changes as has been seen in history so far). A transforming labor market will constitute challenges for the future – possible wage polarization and heterogeneous distribution of unemployment in the labor force might create a demand for policy solutions that have an illiberal direction. In the paper it will be argued that the threat of populism will come from a disgruntled middle class rather than as commonly believed the poorer strata of the wage distribution.