Economists map how to steer innovation toward jobs that pay better instead of eliminating them

Researchers built a theoretical model for identifying which innovations create labor demand versus which ones kill jobs. The model shows that steering technology toward worker-friendly outcomes works best when social safety nets are weak — but only up to a point. Beyond that threshold, governments are better off redistributing wealth than trying to engineer better jobs.

For decades, innovation policy has assumed that faster technology and better jobs flow in the same direction. This paper suggests that's only true under specific conditions, and that there's an actual breaking point where the math flips. If a government has weak unemployment insurance and retraining programs, steering innovation toward labor-complementary technology makes sense. But if labor's economic value has already collapsed due to automation, steering becomes futile — the policy energy should shift to redistribution instead. This matters because it reframes a policy choice that most governments are currently avoiding.