How Does Technology Affect Employment

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Today’s society is characterized by technological advancement at an astonishing pace. Technology is a disruptive force and changes it will bring will alter and modify our socioeconomic system in a permanent and pervasive way. We can identify two main effects of technological progress on employment, pushing in different directions (Aghion and Howitt, 1994). The first one is the “job destruction effect”, meaning that technology substitutes for labour and it will displace an increasing number of jobs. The second one is the “job creation effect”, namely that technological progress enhances productivity, and more and more companies will enter in sectors with high productivity rates. This will contribute to create new jobs and, hence, to increase employment. The decrease in computer capital price is what lead to its extensive adoption in different and increasing number of industries. If the first effect outpaced the second one, we have technological unemployment. Historically (industrial revolution, transport revolution), the second effect has been predominant. In the 21st, however, this trend can reverse. Computers are entering in domains previously considered a prerogative of human beings, as for cognitive domain. These issues were widespread in 1960s and nowadays they had regained prominence. Two authors, Erik…show more content…
In his book “The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era”, he argues that new technology will not increase purchasing power nor will generate new jobs, but instead that “we are entering a new phase in world history – one in which fewer and fewer workers will be needed to produce the goods and services for the global population” (p.

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