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Technology and Employment: Evidence for the UK Labour Market

In: Technological Evolution

Author

Listed:
  • Ioannis Bournakis

    (SKEMA Business School and Université CÔte d’Azur)

  • Michela Vecchi

    (Department of Economics, Kingston University; National Institute of Economic and Social Research)

Abstract

We provide new evidence of the relationship between technical change and employment in the UK, accounting for heterogeneous technologies and heterogeneous labour. Using industry-level data covering the 1995–2019 period, our analysis, based on a derived labour demand function, rejects the labour-replacement effect of technology. Both investments in Innovation and Communication Technologies (ICT) and in innovative properties are positively correlated with overall employment and with the employment of workers with different skills. Total Factor Productivity (TFP) is the only technology indicator to be negatively associated with employment, particularly when considering intermediate-skilled workers. However, the net effect of technology remains positive. Our results also show that the relationship between technology and labour demand has not changed after the financial crisis, due to the muted UK labour market response to the crisis.

Suggested Citation

  • Ioannis Bournakis & Michela Vecchi, 2025. "Technology and Employment: Evidence for the UK Labour Market," Contributions to Economics, in: Luigi Aldieri (ed.), Technological Evolution, pages 163-186, Springer.
    • Handle: RePEc:spr:conchp:978-3-031-85814-7_9
    DOI: 10.1007/978-3-031-85814-7_9
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