Do technical change and mechanisation negatively affect employment in the manufacturing sectors? : an empirical assessment for the OECD countries

Abstract

The present study is aimed at assessing the impacts of technological change and mechanisation on employment in the manufacturing sectors of the OECD countries over the 1995-2018 period. To achieve this goal, the vertically integrated labour productivity and the vertically integrated capital-labour ratio were computed as measures of technological progress and capital intensity per unit of labour, whereas the CS-ARDL and CS-DL approaches were applied to obtain robust results in the presence of cross-sectional dependence and slope heterogeneity. The findings suggest that both technical change and mechanisation may lead to a relative decrease in employment in the short-run and long-run, though for skilled workers the effects appear to be positive. This increase in demand for skilled labour, however, may not be able to compensate for the decline in medium and lesser skilled labourers.