Technology and jobs: A systematic literature review

Abstract

Does technological change destroy or create jobs? New technologies may replace human workers, but can simultaneously create jobs if workers are needed to use these technologies or if new economic activities emerge. Furthermore, technology-driven productivity growth may increase disposable income, stimulating a demand-induced expansion of employment. To synthesize the existing knowledge on this question, we systematically review the empirical literature on the past four decades of technological change and its impact on employment, distinguishing between five broad technology categories (ICT, Robots, Innovation, TFP-style, Other). Overall, we find across studies that the labor-displacing effect of technology appears to be more than offset by compensating mechanisms that create or reinstate labor. This holds for most types of technology, suggesting that previous anxieties over widespread technology-driven unemployment lack an empirical base, at least so far. Nevertheless, low-skill, production, and manufacturing workers have been adversely affected by technological change, and effective up-and reskilling strategies should remain at the forefront of policy making along with targeted social support systems.

Innovation and the labor market: theory, evidence, and challenges

“…Although captured by a partial-equilibrium analysis (since new products creates new industries or increase differentiation within a given industry), this kind of technological change may imply huge labor-friendly impacts (think about the introduction and diffusion of the automobile in the past century). This compensation "via new products" is often called by the current literature "reinstatement effect" (see Acemoglu andRestrepo, 2019 andHötte et al, 2022).…”

“…This is very similar to what discussed above as the compensation mechanism "via new investments". Taken together, the productivity and capital accumulation effects can be considered as "real income effects", accordingly to Hötte et al (2022).…”

Digitalization and employment in Europe: the role of firm's size and the complementarity of R&D

“…New firm-level jobs exceed jobs lost through digital automation in successful firms. Following previous management and innovation research (Ugur et al, 2018;Balsmeier and Woerter, 2019;Barbieri et al, 2019;Hötte et al, 2022), we presume that digitalization creates new types of jobs.…”

“…First, the classical economic theory relates work and technological change through various compensation mechanisms. Empirical research has found opposite impacts depending on the context and measure used (Mondolo, 2021) but mostly found a slightly positive net effect (Hötte et al, 2022). A second stream based on the knowledge-based view (KBV) and dynamic capabilities theory highlights knowledge as the link between digitalization and jobs, the most critical asset for firms' competitive advantage.…”