Does technological innovation bring destruction or creation to the labor market?

The latest era of the industrial revolution is the culmination of an accelerating pace of evolution and digital transformation, one that has had a profound impact on the labor market dynamics. The bootstrap rolling-window causality test has been referred to analyze this, in further detail. This approach has been undertaken to start triggering a discourse on the employment benefits of technological innovation and actively respond to the challenges associated with technological progress in the labor market. By studying the interactions between the number of patents (PIs) and the new employment (NE) opportunities during 2013:M01-2021:M8, we have found that the interaction mechanism between innovation and employment is complicated. In this regard, the positive impact can confirm that technological innovation has given a boost to the labor market. However, this view can also be refuted by the negative influences surrounding the concept, primarily because the substitution effect of employment tends to be greater than the creation effect. Therefore, the NE negatively impacts the PIs, indicating that the labor market can be a leading indicator for innovation and development. It should be noted that Chinese society has been in a period of digital transformation for some time now, and the impact of short-term employment also contains new impetus.

Automated summary

This article discusses the impact of technological innovation on the labor market and finds that the interaction mechanism between innovation and employment is complex. While technological innovation has a positive impact on the labor market, there are also negative effects due to the substitution effect of employment being greater than the creation effect. The labor market can be a leading indicator for innovation and development.