The Employment Effects Of Technological Innovation

Current economic debate on unemployment has long been paralysed on a twofold interpretation. Unemployment is seen as the result of factors within labour market (classical unemployment) such as higher wages and rigidities (see Bentolila and Bertola,1990;Layard,Nickell and Jackman,1991;Bentolila and Saint Paul,1992;Pencavel,1994;Bertola and Ichino,1995;CEPR,1995) or of recessionary macroeconomic conditions (Keynesian unemployment) (see Coen and Hickman ,1988;Dreze and Bean,1990;Malinvaud,1990,1994;Rowthorn,1995).But the two views can not include all the factors which meditate the unemployment. They are only part of the story which are not enough for us to understand the reasons of the present unemployment. We believe that an adequate understanding of today's unemployment has to consider the role jointly by a set of factors such as technological innovations, institutions, which is very important for us to do with the unemployment problem and reduce the null or negative effects of technological innovations on employment.The dissertation is aimed at assessing the employment effects of the technological innovations from theoretical and empirical aspects.Firstly, the dissertation takes a comprehensive theoretical retrospection on the achievements of relations between technological innovations and employment including classical, neoclassical views, the argumentation of Marxism, Schumpeter's Innovation Theory, New Schumpeteristic School and New Growth Theory. And so it provides substantially theoretical base for the standpoint and theoretical contents of the employment impact of innovation which put forward in the dissertation. Secondly, based on the former achievements the dissertation probes into the relations between technological innovations and employment from firm, industrial and national level respectively.At firm level, the dissertation estimates firm level displacement and compensation effects in the model put forward by Angel Garcia (2002) and investigates the relation between the elasticity of demand with respect to price and the employment impact of the firm innovative activities.On industrial level, in the framework advanced by Y.S.Katsoulacos(1985) the dissertation shows the effect of cost–reducing process innovation on industry's labour demand in the short run. In the first place, the dissertation reviews the effect on a competitive industry's demand for labour at a given real wage; Then the dissertation investigates the effect of innovation on labour demand at given nominal wages in the context of imperfectly competitive industries on the other hand. At last the dissertation introduces the effect of innovation a temporary Keynesian equilibrium.On national level , the dissertation evaluates the employment effects of innovation in China through the empirical analysis, At the same time the dissertation identifies and measures the effectiveness of the compensation mechanisms in China, and therefore to shed some light on the main factors that influence the effects of technological innovation on employment. Empirical studies of the relationship between technological innovation and employment in China show two important aspects: On one hand, process innovations are mainly introduced through investment. In other words , labour-saving techniques are introduced through gross investments and so the latter can not simply be considered a way in which to compensate for technological unemployment; on the contrary, gross investments can even reinforce the process of substitution of labour. In this context, traditional Keynesian policies can be ineffective in containing unemployment. On the other hand, the influence of product innovations which is significant and relevant seems to make a difference. In addition, this influence seems to be the driving force of the positive relationship between Chinese technological innovations and employment. And therefore a positive scenario is corroborated in China. At the same time, the estimations support a view which tends to suggest a technology policy addressed to product innovations and new product diffusion. From an employment point of view, such a policy can be far more effective than a traditional Keynesian policy addressed to stimulate new investments.Finally, the dissertation points out the innovation is characteristic of an complicated and dynamic system. Not only the innovational capacity and correct choice of innovational strategy of firms are necessary but also the design of institution has been very important in the effects of innovation on economic development and job creations. The dissertation emphasizes the role which the government plays in designing the institutional rules in the field of innovation which can be theoretically derived from the neoclassical theory of market failure and the innovation policy from the New Schumpeteristic School and the National Innovation System School. Considering the increasing serious situations of the unemployment in the context of China the dissertation develops implications for public policies and institutional designs in the field of innovation based on both the theoretical perspective, arguments and empirical evidence presented in earlier chapters of the dissertation and the study of the policy of developed countries in promoting innovations.Throughout the analyses, the dissertation uses static analyses and dynamic approach in order to show a certain theoretical depth and a widen scope, at the same time, it combines the theoretical ana1yses tightly with the reality. With the applying of statistical and econometrical methods, the dissertation evaluates the effect of technological innovation so as to attempt to decompose the reasons and set up countermeasures for promoting technical innovation and enlarging employment.