Technology Growth and Income Inequality

The growth of digital technology is occurring at a staggering rate and one that cannot be controlled or regulated. However, its negative social impacts can both be measured and minimised. The wonders of increasing efficiency and productivity to levels never imagined before are driving the economy into a new age, but too many are being left behind. But why are we now concerned about this? Levels of inequality are returning to as they were in the 1800s, and the social problems that arise as a result of this are far more damaging than the financial problem itself. It has the power to destroy nations. Hence why it is essential to work with the machines to grow as nations, in such a way that everybody benefits.

The overall effects of technology on inequality are what I set out to find, with solutions to how the negative impacts can be minimised. The mechanisms through which inequality is affected became less important as my research progressed, since it became clear that lack of government intervention was to blame. I found that the lack of labour mobility among the population, particularly median income households, leads to displaced workers who cannot grasp the high-skilled jobs generated through the growth of digital technology. The demand for labour is there, the willingness to work is there, the only things missing are the necessary skills.

The research collaboratively pointed towards a common solution.Governments should focus on financially encouraging firms to increase training schemes for those who are at the highest risk to being displaced by automation. The reason for having the firms develop and run the schemes are because they have the best knowledge on what is needed from the workforce.