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Technical change, unemployment and labor skills

  • Nelly-Eleni Pavlidou
  • Persefoni V. Tsaliki
  • Ioannis N. Vardalachakis

Purpose – This paper aims to contribute to the open, theoretical debate upon the effects of technical change on the production and labor process. Design/methodology/approach – The “optimistic” approach, which connects the compensation mechanisms and human capital theory, is compared to the dynamic approach of the labor process. Recent Labor Force Survey data are used to identify the trends and characteristics of labor markets in G-7 countries. Findings – In all G-7 countries, unemployment is present and deepening in the last two decades, whereas any employment growth observed is mainly associated with part-time, temporary, low-paid and vulnerable jobs. Moreover, any rise in employment rates refers rather exclusively to unskilful labor. Practical implications – Neither the increase in effective demand (high growth rates), nor the relaxation of labor market rigidities could lead to a sufficient employment growth that would evade unemployment. In addition, the increased investment in human capital failed to upscale workers' position in the production process. Originality/value – The value of this paper lies in its acknowledgement that an effectual policy agenda for labor-related issues should break apart from conventional beliefs that the increase in flexibility of labor market, the abolishment of asymmetries in supply and demand of labor skills and the enhancement of economy's effective demand could cope and provide a solution to current labor market hazards. JEL classification: B14, P16, J20, J24, O30

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Article provided by Emerald Group Publishing in its journal International Journal of Social Economics.

Volume (Year): 38 (2011)
Issue (Month): 7 (July)
Pages: 595-606

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Handle: RePEc:eme:ijsepp:v:38:y:2011:i:7:p:595-606
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  1. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," NBER Working Papers 8940, National Bureau of Economic Research, Inc.
  2. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  3. Ake Lundvall & Bengt, 2003. "Why the new economy is a learning economy," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2003(117).
  4. Christopher Freeman, 1991. "Innovation, Changes of Techno-Economic Paradigm and Biological Analogies in Economics," Revue Économique, Programme National Persée, vol. 42(2), pages 211-232.
  5. Persefoni V. Tsaliki, 2009. "Economic development and unemployment: do they connect?," International Journal of Social Economics, Emerald Group Publishing, vol. 36(7), pages 773-781, June.
  6. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
  7. Persefoni Tsaliki, 2008. "Economic development, human capital and technical change: the question of machinery revisited," International Review of Economics, Springer, vol. 55(4), pages 363-371, December.
  8. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1.
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