Sample Essay on The Impact of Technology on Labor Markets

Technology is a key driver of a country’s economic progress and development. Various emerging technologies have tremendously increased productivity and overall economic growth. However, technological advancements in the economy have resulted in adverse impact on the workersin the recent past. Bunker (2014) reveals that although the technological shift does not necessarily reduce the total employment, the disruptions it causes in the current occupations results in economic inequalities in the labor market. For technological advancements to be beneficial, workers must align their skills to leverage the created opportunities.Technological improvementsdecrease job possibilities for low-skilled workers and increasethe demand for high-skilled workers, potentially leading to the widening inequalitygap and changes in the overall rate of employment.

Low-skilled workers are the most affected by technological advancements, as new technological devices replace the labor force doing repetitive jobs. According to Rehman(2015), unemployment has rapidly grown within sectors such as construction, administration, and the service sector due to redundancy. Similarly, employment opportunities have increased for the professionals who possess the skills complementary to new technological advancements. For instance, workers educated and skilled in disciplines such as information technology and engineering have benefitted from the technological shifts taking place in the economy. In brief, technological advancements are beneficial to the labor force with greater creative and analytical skills for solving modern problems. A popular economic implication of the new technology is that it results in a negative relationship between productivity and job creation. Theoretically, employment levels are supposed to risewith increased productivity of the labor force, but this has not occurred due to technological innovations. The new technology has led to economic growth through increased output, productivity, and efficiency, but at the same time it has hampered job opportunities in various sectors. As a result, the GDP of a nation growswith the technological shifts, but the average income and employment levels continue shrinking.Concisely, the new technology is likely to widen the gap between the underprivileged peopleand the rich, as rich individuals have greater investment and employment opportunities compared to those with less education and low skills.

There is another point of view regarding the possibilities of employment in the context of technological progress. Bunker (2014) observes that technological advancements may in the coming years increase the overall employment level for nations. Although the technological shocks have reduced the demand for low-skilled employees, such workers are likely to retrain in the future and look for employment elsewhere. However, this assumption will depend on many factors, such as the flexibility of these workers and availability of training institutions to absorb them. In highly industrialized economies where the labor market is highly responsive and adaptable to changes in technology, the rate of employment is unlikely to be affected. However, in less industrialized countries, low-skilled workers must stay intact with technological advancements by developing their creative, analytical, and information technology skills.Computing skills, for instance, are universal to virtually all sectors, including the financial sector, education, and healthcare where employment opportunities constantly arise. Therefore, technological advancements will in the shortrun benefit highly skilled workers and impedelow-skilled workers. Nevertheless, technological progress will not substantively affect the overall employment in the future.

Technological advancements increase the demand for the high-skilled workers who possess greater computing, analytical, creative, and problem-solving skills. The growingdemand results in increased wages for high-skilled workers in comparison with low-skilled workers and consequently significantwage inequality. Therefore, technological advancements largely contribute tothe widening inequality gap as well as the gap between the underprivilegedand the rich in most industrialized economies.According to Rehman(2015), other than technological progresscausing structural unemployment, it also creates regional unemployment. The reason is that technological shifts benefitthe locations with a big number of companies applying the new technology. As a result, employment opportunities are likely to shrink in other regions without or with fewer such companies. If the benefit arising from the application of the new technology fails to diffuse into other regions, some regions may continue experiencing high growth at the expense of others.That is why the impact of technological development varies from one country to another.

In conclusion, technological advancements spread at a faster rate than the labor market can adapt and learn new skills, which results in hampering the jobs in the low-skilled sectors. Although technological development causes both structural and regional unemployment, the impact it has on the overall rate of employment is insignificant in the longrun. The total rate of employment may not reduce, as increased employment opportunities offset the decrease in the demand for low-skilled workers. However, disruptions in the current occupations across various sectors can result in considerablewage inequalities. Policymakers must find ways of helping the workers at various levels to adjust to technological shocks. Moreover, they have a responsibility to createthelabor market that broadly shares the benefits of the increased productivity as well as numerous employment opportunities arising from technological innovations.




Bunker, N. (2014,August 7). Technology may not reduce employment but still affect jobs. Washington Center for Equitable Growth.Retrieved from

Rehman, D. (2015,June 18). The impact of technology on unemployment.The Market Mogul. Retrieved from