1. Wifi

2. Creating a Good Jobs
Economy
Dani Rodrik
September 2023

3. The problem: lagging aggregate
productivity…
Source: Resolution Foundation

4. But also labor-market polarization…
United States U.K.
Source: Autor (2021) Source: Salvatori (2015)

5. And widening regional inequalities
Source: Resolution Foundation

6. A good jobs strategy
• Inclusive prosperity requires not just improved productivity, but
more productive jobs for the bulk of the labor force
• addressing inequality where it is created -- in the productive sphere – rather
than indirectly through transfers and social support
• Jobs are not only a source of income, but also of personal dignity
and fulfillment
• Disapperance of good jobs (through trade, automation, and
austerity shocks) has been linked to a variety of social and
political ills
• rising rates of crime, addiction, broken families, suicide
• support for right-wing nativist political movements
• increase in authoritarian values

7. What’s a good job?
• Predictable, stable employment enabling middle-class living standards, with
core labor protections/rights such as safe working conditions, collective
bargaining rights, regulations against arbitrary dismissal, career ladders,…
• A variety of operational indicators
• JVS job quality index: a composite that measures wages, benefits, scheduling flexibility
and predictability, access to career ladders, and the degree to which the work
environment is supportive
• Gallup survey (2020 of job quality: a weighted avemrage of respondents’ satisfaction on
10 dimensions of work, including “having a sense of purpose and dignity at work” and
“having the power to change things that are unsatisfying at work”
• Good Jobs Institute scorecard: focused on employee basic needs and stability
• OECD database on job quality: statistical indicators on earnings, labor market security,
and the quality of the working environment as subdimensions
• Job Quality Measurement Initiative: a recent collaboration between the Families and
Workers Fund and US DoL

8. Low paid jobs are bad jobs beyond pay
Source: Resolution Foundation

9. The good jobs-industrial policy connection?
• When we talk about (how to create) good jobs, tendency to focus on:
• training & education
• labor market regulations (e.g., minimum wages)
• bargaining power of workers (e.g., unionization)
• self-interest of employers (the “high road”)
• Limits of traditional remedies
• training & education take time, and not clear we have good models that scale up
• regional productivity gaps in UK are large even after controlling for education
(Stansbury et al., 2023)
• mandating higher earnings create tensions with employment levels (e.g. France),
in the absence of higher productivity
• not clear high-road/efficiency wage arguments hold sway for economy as a whole
(Ton 2014; Osterman 2018)
• What about a strategy based on productivity?
• increase demand for less-educated, “lower-skill” workers by increasing
productivity of such workers and the firms that employ them

10. What is the good jobs-industrial policy
connection?
• Productivity is the domain of industrial policy
• fostering innovation & structural change towards more productive activities
• long-standing (and largely unproductive & uninformative) debate about
efficacy
• But when we talk about (objectives of) industrial & innovation
policy, tendency to focus on:
• manufacturing, supply-chains, the green transition, global competitiveness
• economic rationale: externalities or coordination failures
• long and inconsistent history of industrial policy in UK (cf. Coyle and Muhtar, 2021)
• jobs as incidental, or as by-product of those other objectives (e.g., CHIPS Act)
• The bulk of jobs will come from services in the future, even if
recent efforts to revive manufacturing are successful

11. Where the jobs are (and where they are not)
Source: Resolution Foundation
Source: OECD Stan database

12. The output-
employment
disconnect in
manufacturing

13. Are recent US industrial policies helping?
Clearly yes for manufacturing investment; perhaps for output; but apparently not for
employment…

14. The bottom-line diagnosis
• Hence the inability of our labor markets to create sufficient productive
jobs with good career ladders for the less skilled/educated segment of
the workforce, especially in lagging regions, will not be addressed as a
by-product of
• traditional industrial policies focusing on advanced, globally competitive
manufacturing (e.g., CHIPS Act)
• green industrial policies (e.g., IRA)
• We need an industrial policy that puts good job creation front and
center, focusing on
• the demand side of labor markets (firms), in addition to supply (skills, training)
• services rather than (or in addition to) manufacturing
• higher productivity as the sine qua non of good jobs for less-educated workers,
as necessary complement to minimum wages and labor regulations

15. An alternative model
Local partnerships incentivized and
supported by national resources
building on, strengthening, and disseminating
existing local collaborative efforts that combine
workforce development with business
development, explicitly targeting good jobs
Priorities? CHIPS subsidies run into several tens of
$billions and IRA into hundreds of $billions
vs. $500 million for the good jobs challenge

16. Local good jobs policies: instruments
• Traditional approach: subsidies and tax incentives
• theory: Pigovian remedies presume too much knowledge ex ante, relatively static
environment, and low-dimensionality of the underlying space of uncertainty and policies
• Evidence: subsidies work, but at high budgetary cost generally
• Proposed approach: portfolio of customized public services & inputs (cf. Bartik)
• coordination, workforce & management training, business services, technology,
greenfields, regulatory assistance – financing too, when needed
• Britain falls short on several dimensions
• e.g., support for services-focused business assistance; public and employer-paid training;
scaling up of successful programs; wrap-around services
• the new Investment Zones, announced in March 2023, explicitly focus on locally-driven
public-private partnership around customizable public inputs, including business support,
infrastructure and skills; however, good jobs do not feature as a core goal
• ARIA also a missed opportunity for focusing on good jobs?

17. What’s different: governance
• Traditional approach: top-down, arms’length, ex ante selection of
sectors/firms, hard conditionality (in principle)
• “picking winners”
• Proposed approach: iterative, strategic collaboration, where the role of
public sector is
• goal-setting
• discovery and provision of missing public inputs
• coordination
• “soft” conditionalities
• monitoring and goal-revision
• fostering local experimentation
• Such practices already exist (ARPA and successful local economic
development coalitions; Fallows & Fallows, 2018)
• “we are at the center of everything, but control nothing”

18. What’s different: what is targeted
• Traditional approach: manufacturing, big firms, “national
champions,” most productive segments of economy
• Proposed approach: SMEs, mostly in services, medium-productivity
activities
• where the jobs for the least skilled are most likely to come from
• tradable services in Britain (business services, finance, creative industries)
• but also care, retail, education (since tradable services tend to be high-skill
and unlikely to create enough jobs for low- and middle-skill workers)

19. Firms have flexibility in technology choices, and
can adopt more labor-friendly technologies
• Firms often face an envelope of technology choices, with little
difference to profit/productivity, but potentially huge implications for
workers (Fuchs 2022)
• New technologies that enable service provision customized to customers’
needs can enable both higher productivity and higher labor demand by
increasing tasks
• Examples of digital tools and AI systems
• long-term care: real-time info to enable care workers to exercise more
autonomy and agency (e.g., vary eating schedules, undertake additional
medical tasks, respond to needs of residents)
• retail: info systems that enable specialized sales and customer services, greater
autonomy in decision-making
• education: enable provision of specialized services targeted to individuals’
learning needs and objectives
• Examples of these already exist, but not clear there are incentives in the
system to adequately push decision-making in their favor

20. Basic quid pro quo
• Firms need access to stable, skilled workforce, public inputs, reliable
horizontal and vertical networks (w/out holdup, informational problems),
technology, contractual and property rights enforcement
• Governments need firms to internalize good jobs externalities in
employment, training, investment, and technological choices

21. Comparing this approach to traditional
industrial policy

22. A good jobs strategy
• Employment in manufacturing has been the traditional path to
middle-class societies
• But jobs in manufacturing will not come back
• Dissemination of productive employment in services is key to
creating inclusive societies of the future
• Policies must work on both sides of the labor market
• supply side (training, skills, regulation, standards)
• demand side (good firms, appropriate technologies)
• This is difficult, unprecedented, and will have elements of
“industrial policy” -– though in a different guise

23. Wifi