Question

What is the impact of major technological and productivity gains on labor markets? Consider both a short-term and long-term effect.

Answer 1

Impact of major technological and productivity gains on labor market;

Technological progress has assisted workers, through labour-augmenting technology, or replaced them, via automation. In both cases, the overall effects on the market’s demand for labour are ambiguous.Current technological progress has led to a higher relative demand for skilled workers and a lower relative demand for workers performing routine activities, this could be beneficial for the companies but somehow would be depressing for the labour market.

In short-run technology could enhance the labour productivity, learning(curve) efficiency of labour and could support them to best use of available resources, that's why in short-run it would present major postive impact on labour market. And in long run technological automation does not necessarily equate with future unemployment because the development, adoption and widespread use of future technologies will hinge on a number of factors, including feasibility and affordability, as well as the legal and regulatory framework in particular countries and public acceptance of new technology. However, future automation is likely to be disruptive for workers whose skills will become obsolete and who face the risk of job losses and have to switch tasks and jobs.