“Locations where new work creation has been larger were also locations where employment levels grew more quickly”

Professor Giovanni Peri, a renowned economist from the University of California, will give a Special Lecture at the IAB on 20 June 2024. He will share his research on the rise of new work in the US, influenced by local and global factors. In this interview, he delves into the concept of new work, its significant impact on employment growth, and offers actionable insights and recommendations for policymakers in Germany and Europe to harness these trends effectively.

How do you define “new work”?

New work is represented by new types of jobs, involving new tasks, knowledge and practices that differ from anything that has existed previously. They can be linked to new technologies, new consumer needs or new abilities. For instance, new work that has been introduced in the US since year 2000 includes jobs such as a social media consultant, drone pilot, dietary supervisor and sommelier.

What fraction of overall employment growth can be attributed to new work?

In each of the last four decades about 15–20 per cent of jobs were introduced as new work.

Which methods did you use to identify and measure new work in the United States?

We develop a new machine-learning-based method that uses the detailed “name” of a job – called the job title – (e.g. database administrator, business management consultant, price economist) and evaluates how different in meaning it is from any other job title that existed in the census job list a decade earlier. The “difference” is calculated by transforming each job title into a vector, which describes its “position” in the space of all possible titles, based on the meaning of words. A job title that appears for the first time in a census list and is sufficiently “distant” from any existing one is considered as new work.

New work tends to appear in occupations using more cognitive-analytical skills, but also interpersonal and communication tasks.

How would you characterise new work in terms of tasks and skills?

Our analysis shows that new work tends to appear in occupations using more cognitive-analytical skills, but also interpersonal and communication tasks, and where those with education represent a larger share of the workers.

What is the relationship between new work and technological change?

A significant share of new work is related to new technologies; in particular, new work in cognitive-analytical intensive occupations has a technological basis. This suggests that while technology replaces some type of jobs (especially those doing routine/standardised tasks), it can also stimulate the introduction of new work.

Locations where new work creation has been larger were also locations where employment levels grew more quickly.

How is new work related to employment growth or decline at a local level?

Locations where new work creation has been larger were also locations where employment levels grew more quickly. A one percentage point increase in new work generated at a local level resulted in a 2 to 3 percentage point increase in employment growth, suggesting that new work can also stimulate employment in other, related jobs. For example, as an economy introduces a job such as “social media consultant”, other related jobs in IT management, in coding and so on are in higher demand.

To what extent can local factors foster the emergence of new work?

We found that large, skilled cities, i.e. locations with high populations and a high share of those with a education, are those that generate more new work. In particular, the presence of dynamic universities that educate a larger share of the population is the key local feature for generating these new jobs. New jobs need new skills, the implementation of new ideas and technology, and hence the availability of a good college/university education locally is key in this regard. At the same time, the aging of the population, with increased demand for services (health, hospitality, personal services and similar) by older people, seems an important local predictor of new work.

An aging population will generate needs and demands that will, in part, need to be met by new types of work.

What would you recommend to German and European policymakers in order to promote the creation of new work, especially in the context of demographic and ecological transformation?

High-quality local universities are a key factor in translating innovation into new work, and in turning technological change and globalisation into new work opportunities. Education policies that help people to complete a college/university education will be crucial for the future. An aging population will generate needs and demands that will, in part, need to be met by new types of work. The ecological transformation and the related electric car, green energy transformation provide types of technologies that will translate into more employment opportunities if the local human capital and education levels are sufficiently high.

How has the employment structure in developed countries changed over the last century?

For a number of decades, developed countries have drastically changed their economies and types of work. In 1900, most of the US economy and employment was related to agriculture, in 1940s and ’50s, manufacturing was the driver of growth, while since 1980 it has been the services and human capital intensive sectors that employ most people. The transformation of jobs is a constant of recent history. Our paper is developing a method that can measure this transformation more clearly and we will expand the analysis to understand also historical changes. We will then be able to apply this method to other countries to see how labour market transformations have affected them.

More information on the IAB Special Lectures Series

For more information on the IAB Special Lecture with Giovanni Peri on 20 June 2024 and how to register for attending it on site or online, please go to:
https://iab.de/en/iab-veranstaltungen/measuring-and-predicting-new-work-in-the-us-the-role-of-local-factors-and-global-trends/

For more information on upcoming IAB Special Lectures, please go to:
https://iab.de/veranstaltungen/special-lecture-series/

DOI: 10.48720/IAB.FOO.20240614.01