Capital Accumulation, Total Factor Productivity, and Employment Growth Medium-Term Relations in a Cross-Section Analysis

Robert Stehrer

No 161, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: There is a widespread concern that new technologies and digitalization have strong negative impacts on labour demand. This paper analyses the impact of ICT capital accumulation and TFP growth on employment growth (persons and hours worked) and the labour income share in the pre- and post-crisis years. The cross-section results (over countries and industries) suggest that on average TFP growth has no significant influence on employment growth, and perhaps even a slightly positive one, which may point to increasing competitiveness. There is no evidence of significant impacts of the accumulation of ICT capital on employment growth, whereas a positive relationship is found between non-ICT capital accumulation and employment growth. Concerning labour income shares, results at the industry level point to a negative impact of TFP growth, but no effects of ICT capital accumulation. Domestic and foreign inter-industry linkages have – if at all – only modest impacts. These results are generally in line with some recent literature pointing towards only limited effects of new technologies on labour demand.

JEL-codes: C21 O33 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-05
New Economics Papers: this item is included in nep-eff and nep-ict
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:161

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