Question

The following questions ask you to examine the effects of the pandemic on the Canadian economy. In here, we assume Canada is a closed economy and initially in its long-run equilibrium. Each part of the question is NOT related to other parts of the question.

b) The pandemic has speeded up the use of automation and artificial intelligence (AI) in the production process. • One group, say group A, believes that to some workers, this is bad news. Why? What would happen to the long-run unemployment rate to these workers? Explain. • The other group, say group B, believes that some workers could benefit from this. Why? What would happen to the long-run unemployment rate to these workers? Explain. Note: When analyzing the impact on the long-run unemployment rate, you should relate your answer to the job finding rate and the job separation rate

Answer 1

Answer - The pandemic hit many sectors of the economy as the closure of markets except pharmaceuticals and groceries leads to hike in unemployment rate. Also, the purchasing power of the consumers declining . The unemployment rate on canada is highest , nearly 2 million of people lost their jobs.

A) In case of group A workers, the use of artificial intelligence will lead to loss of employment as we found an alternative which is less costly in long run. But these methods are adopted by large business houses. This is due to the fact that these systems need huge investment. It is bad news for unskilled workers who do not have knowledge to operate artificial intelligence . The long run unemployment rate for these kind of workers is worst. In long run, development of better systems and technological access can leads to more use of artificial intelligence. This pandemic taught the importance of pursuing online system in an economy.

B) In case of group B workers, these type of workers are involved in manufacturing health care equipments or the one who contribute in developing new technologies. The prospects of their unemployment are very mild. Tech companies that hire immigrants with skills can generate employment in long run. High skilled workers can contribute in GDP for long run. The pandemic taught us the importance of adopting the modes of artificial intelligence . So it is necessary to work on these systems . It leads to long term importance of workers working in technical sector. Consequently , the prospects of unemployment of these workers are less than the workers not indulged in technical sector.