Technological Advancement and Employment Changes: Recent Trends in the Indian Economy

Rajat Kathuria () and Aakash Dev ()
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Rajat Kathuria: Department of Economics and Dean - School of Humanities and Social Sciences, Shiv Nadar University
Aakash Dev: Department of Economics, Shiv Nadar University

The Indian Journal of Labour Economics, 2024, vol. 67, issue 3, No 2, 637-660

Abstract: Abstract With the advent of computers, technology arrived in the developed world in the second half of the 20th century. The developing world, including India, followed the West with greater technological import within the domestic economy. With a surge in the COVID-19 pandemic and system-induced lockdown restrictions, technology has found its way into our daily lives more than before. The extent to which adoption of new technologies is occurring is prompting anxieties, especially among emerging markets like India. How is it changing the employment paradigm? We use a relatively recent longitudinal panel dataset—Consumer Pyramids Household Survey (CPHS) from the Centre for Monitoring Indian Economy (CMIE) to assess the impact on employment in a rapidly changing technology milieu for workers of varying skill types. Our analysis for the last five-year period starting from January 2019 shows—(i) a consistent decrease in the share of low-skilled workers across all sectors—primary, secondary, and tertiary, and (ii) a rise in the share of skill intensity across sectors; albeit at a varying pace. The observed changes were accentuated during the COVID-19 pandemic. All industries adapted to the changing needs by allowing remote working and greater flexibility. Automation enhances the demand for complementary skills for some workers while it generates fears of replacement for others. We perform an econometric analysis to examine the likelihood of a worker being employed by varying skill types and gender. Studying the first trimester for each of the last five periods, we observe a falling likelihood for low-skilled workers and an improvement in the likelihood of employment for skilled workers. Employment likelihood for skilled women has also picked up in recent years. Contrary to the developed market experience, we do not observe a hollowing out in the labour market, implying that evidence of job polarisation is so far absent for India. With skill upgradation occurring across verticals, we conclude that low-skilled workers will likely lose out in the short to medium run.

Keywords: COVID-19; Technology; Employment; Skill composition; Primary industries; Secondary industries; Tertiary industries; Low-skilled workers; Specialists; Likelihood analysis (search for similar items in EconPapers)
JEL-codes: J01 J08 J21 J23 J24 J39 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s41027-024-00519-z

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