Policy Brief: New Evidence on the Effect of Technology on Employment and Skill Demand

Johannes Hirvonen, Aapo Stenhammar and Joonas Tuhkuri

No 108, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract How do new technologies such as robots affect the demand for work and skills? The common idea is that new technologies, especially in manufacturing, replace jobs and increase the demand for highly skilled workers. However, there is little concrete evidence for or against this idea. This brief presents the findings from a recent study by MIT, Etla, and Labore on the effects of new technologies on employment and skill demand in Finnish manufacturing. We use technology investment subsidies to compare otherwise similar firms, some of which received a subsidy and others not. The results show that technologies did not destroy jobs or increase the share of highly skilled workers in the manufacturing firms of our sample. New technologies led to increases in employment, but the average level of education, occupational distribution, cognitive abilities, and personality traits of the employees in our sample firms did not change as a result of a new technology investment. We find that these firms typically do not use new technologies to replace workers with machines but to do new things: make new products flexibly and improve their quality and the reliability of delivery. One explanation for this is that a significant share of Finnish manufacturing firms specialize in flexible high value-added production, where the role of technology is not primarily to displace human labor but to improve the competitiveness of the firm by other means.

Keywords: Technology; Labor; Skills; Industrial policy (search for similar items in EconPapers)
JEL-codes: J23 J24 O33 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2022-04-11
References: Add references at CitEc
Citations: View citations in EconPapers (16)

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