How does a decrease in technology affect unemployment?

The analysis showed a negative and positive effect on salaries and employment due to the increase in the number of robots in the economy. The model used in the study was based on previous research, but extended the framework to take into account the varying proportion of tasks that robots perform in all sectors. The model reversed the change in employment and salaries depending on exposure to robots (exposure to robots is calculated as the national penetration of robots in each industry multiplied by that industry's participation in the local labor market). The negative effect is that robots displace current workers from their occupations.

The positive effect is the price-productivity effect. The increase in the number of robots reduces the cost of production, thus expanding the industry and increasing the demand for labor. The effects of technological unemployment are both positive and negative. On the one hand, technology can make workers more productive and create new jobs and tasks for them.

On the other hand, technology can also cause workers to be displaced as machines or robots complete tasks that were previously performed by humans. This can lead to a decline in wages and employment. Technological unemployment is the unemployment that results from the introduction of new technologies into the economy. Technological unemployment is due to the displacement effect, in which robots or other automation systems complete tasks that were previously performed by workers.

In addition, technology-induced productivity increases free up production resources that can increase the demand for labor for other tasks within the same company or industry. This observation is reaffirmed by analyzing studies that analyze the net effect of technological change on employment, which in turn suggests that the net impact of technology on the workforce is rather positive than negative (Figure 1, panel d). Given the persistent racial and ethnic gaps in educational attainment, these differences could leave many people of color out of the opportunities provided by technological advances in the labor market. In addition to the replacement of workers by technologies, another reason why these technological advances are increasing unemployment in the economy is the increasing complication and slowdown in the process of matching workers with work.

There is no single answer to this question, as the solutions to technological unemployment will vary depending on the particular situation. Any technological development in the economy in the form of new machinery reduces the demand for labor and thus increases unemployment in the economy, since capital is replacing labor at a rapid rate. In addition, new technologies can increase the marginal product of labor and capital, which translates into higher wages and returns on capital. This trend has been accompanied by an increase in economic research on the interactions between technology, work and the economy.