Evidence-based policy making

The relationship between technology and employment has always been a source of concern, at least since the first industrial revolution. However, while process innovation can be job-destroying (provided that its direct labor-saving effect is not compensated through market mechanisms), product innovation can imply the emergence of new firms, new sectors, and thus new jobs (provided that its welfare effect dominates the crowding out of old products). Nowadays, the topic is even more relevant because the world economy is undergoing a new technological revolution centred on automation and the diffusion of Artificial Intelligence (AI).

Over the past decades, academics worldwide have conducted experiments with fictitious job applications to measure discrimination in hiring. This discrimination leads to underutilization of labor market potential and higher unemployment rates for individuals from vulnerable groups. Collectively, the insights from the published research suggest that three groups face more discrimination than ethnic minorities: people with disabilities, less physically attractive people, and older people. The discrimination found in Western economies generally persists across countries and is stable over time, although some variation exists.

Artificial intelligence (AI) has streamlined processes, improved workforce allocation, and created new jobs to meet the needs of digitalization and automation. Individuals with AI capital experience greater employment opportunities and higher wages, particularly in high-skilled roles and large firms. Training in AI helps reduce gender-based digital disparities, empowers individuals, and enhances their employability. Policymakers should promote inclusive AI development policies to prevent widening AI-related divides and unemployment, and to ensure equitable opportunities.

The use of anonymous job applications (or blind recruitment) to combat hiring discrimination is gaining attention and interest. Results from field experiments and pilot projects in European countries (France, Germany, the Netherlands, Finland and Sweden are considered here), Canada, and Australia shed light on their potential to reduce some of the discriminatory barriers to hiring for minority and other disadvantaged groups. But although this approach can achieve its primary aims, there are also important cautions to consider.