GLBL ST 1 Lecture Notes - Lecture 13: Thomas Piketty, Offshoring, Capital Intensity
Week 7 Lecture 1: The Industrial Reorginzation of the Core
A: The changing nature (employment) and location of jobs, 1970s-present
● Nature of jobs:
1. Increased capital intensity in manufactring and labor intensive jobs off-shored. New
technologies as important in reducing manufacturing jobs as globalization; capital intensive
manufacturing jobs; new technology decreasing the number of manufacturing/factory job
(people replaced by machines)
a. Tech substituting for labor contributing to employment loss
b. Graph: US Manufacturing: Output vs. Jobs since 1975
i. Employment in manufacting has decreased slowly, than more rapidly while
output has been increasing (result of new tech)
ii. Manufacturing hasn’t declined, manufacturing EMPLOYMENT has (esp. In high-
tech sectors: vehicles, pharmaceuticals, chemicals)
2. Rise of dual structure service sector, based on educational polarization producer and financial
(FIRE) vs. consumer services (retail, healthcare, (not medics), personal services, etc.)
a. Loss of manufacturing jobs means that other jobs are at danger as well
b. Overall shift AWAY from manufacturing, and rise in jobs in service sector
c. Increasingly bifurcated service sector, some that pay well and some that pay poorly
(dead end jobs---retail)
i. E.g. Mcdonalds; pretty flat hiearchy (manager at most), but steep rise in hiearchy
OUTSIDE the individual location
d. Explosion of jobs associated w/ financial sector: banking, finance, etc.
i. FIRE=finance, insurance, and real estate; phenomenal rates of growth of
employment and total share of economies in core countries (esp. US)
ii. High paying vs lowpayig consumer service jobs
e. Graph: US structure of employjment: Total employment shapes by sector
i. Government is huge employer of jobs: DMV, ,post office etc. has gone down
recently
ii. Increasing importance in FIRE
iii. Explosion of personal services
1. Related to trends across economies and rather than globalization
a. Shrinking of importance of manufacturing jobs and increase in
importance of professional services
iv. Shift from mass production to niche sectors (including services)
f. Graph II: Cumulative European jobs moving offshore
i. Overall increase in offshoring in multiple countries across multiple sectors
ii. Outsouring abroad=offshoring; overall increase in offshoring ofter time as of
recent
iii. Outsourcing can occur within the borders of a country as well!
iv. Outsourcing has certain balance when it comes to providing jobs
g. Nature of job loss; even service sector is not immune to job loss
i. Many many graphs
ii. Piketty split: ratio of household income to national welath?
iii. Trends in income and wealth
1. Increasing redistribution of income and wealth esp. From the middle
income categories to the top 1%!
2. Rise of income disparity and shrinking of middle class
3. Rise of financial services industry as driver of economic growth (partiulary in US and UK
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Document Summary
Week 7 lecture 1: the industrial reorginzation of the core. A: the changing nature (employment) and location of jobs, 1970s-present. Nature of jobs: increased capital intensity in manufactring and labor intensive jobs off-shored. Employment in manufacting has decreased slowly, than more rapidly while output has been increasing (result of new tech: manufacturing hasn"t declined, manufacturing employment has (esp. Increasingly bifurcated service sector, some that pay well and some that pay poorly (dead end jobs---retail) Mcdonalds; pretty flat hiearchy (manager at most), but steep rise in hiearchy. Outside the individual location: explosion of jobs associated w/ financial sector: banking, finance, etc. Fire=finance, insurance, and real estate; phenomenal rates of growth of employment and total share of economies in core countries (esp. Us: high paying vs lowpayig consumer service jobs, graph: us structure of employjment: total employment shapes by sector, government is huge employer of jobs: dmv, ,post office etc. has gone down recently.
