2016/10 | LEM Working Paper Series | ||||||||||||||||
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The Innovation-Employment nexus: a critical survey of theory and empirics |
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Flavio Calvino and Maria Enrica Virgillito |
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Keywords | |||||||||||||||||
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Innovation, Technological Unemployment, Compensation Mechanisms
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JEL Classifications | |||||||||||||||||
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D21, J23, L10, O31, O33
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Abstract | |||||||||||||||||
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Understanding whether technical change is beneficial or detrimental
for employment is at the center of the policy debate, especially in
phases of economic recession. So far, the effects of innovation – in
its manifold declinations and intrinsic complexity – on labour demand
have proven to be not unequivocal. This essay critically reviews the
role of technical change in shaping employment dynamics at different
levels of aggregation. Firstly, it disentangles theoretically the role
of different compensation mechanisms through which employment adjusts
after an innovation is introduced. Secondly, it critically presents
the most recent empirical evidence on the topic, with a focus on
methods and limitations. Finally, it provides an attempt to
conceptualize a number of stylized facts and empirical regularities on
the innovation-employment nexus.
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