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Effects of Technological Shock on Employment: Application of Structural Approach VECM

Author

Listed:
  • Sirine Mnif

    (Faculty of Economics and Management of Sfax)

  • Chiraz Feki

    (Faculty of Economics and Management of Sfax)

  • Ines Abdelkafi

    (Faculty of Economics and Management of Sfax)

Abstract

This article examines the link between technological changes and employment. The objective of this work is to determine the impact of technological innovations in the short and long term. In all the developed countries, the unemployed are rather low-skilled whereas highly skilled employees face less unemployment problems. Several studies have shown that technical progress leads to the casualization of non-skilled labor and to unemployment. This idea is based on the substitution of capital at work. Moreover, technical progress requires a skilled workforce capable of creating, innovating, and controlling further progress. Thus, technological innovations are not neutral; there are skill-biased technological changes. However, according to the theory of compensation, technological innovations reduce short-term employment (replacement effect) but create it in the medium and long term (compensation effect). The empirical validation of this work is based on the technique of structural VECM for the case of Tunisia. Unlike the theory of compensation, our results support the fact that the short-term effect of technological innovations on employment is positive; however, in the medium and long term, it is negative.

Suggested Citation

  • Sirine Mnif & Chiraz Feki & Ines Abdelkafi, 2018. "Effects of Technological Shock on Employment: Application of Structural Approach VECM," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1138-1153, December.
    • Handle: RePEc:spr:jknowl:v:9:y:2018:i:4:d:10.1007_s13132-016-0405-5
    DOI: 10.1007/s13132-016-0405-5
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    References listed on IDEAS

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    Cited by:

    1. Ayhan, Fatih & Elal, Onuray, 2023. "The IMPACTS of technological change on employment: Evidence from OECD countries with panel data analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    2. Joseph Pasky Ngameni & Ludovic Feulefack Kemmanang & Sylvain Bertelet Ngassam, 2022. "Growth Gap between China and Africa: Do Digital Technologies Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 24-43, March.

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    More about this item

    Keywords

    Technological innovations; Employment; Structural VECM;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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