Munich Personal RePEc Archive

Globalisation, technology and employment: looking back

Majumder, Rajarshi (2020): Globalisation, technology and employment: looking back.

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Globalisation has been the buzzword across the world for a major part of the last 40 years or so. Starting at a creeping pace in the mid-1980s, it has advanced at unprecedented pace over the last two and half decades. Trade barriers have come down, linkages have been formed and strengthened, and a plethora of economic activities have become intertwined, across countries and continents giving rise to the global value chain. Technological advancements across the globe has reinforced globalisation. However, after a quarter of century, voices are being raised regarding inequalities and instabilities in the labour market. Against this backdrop, this paper attempts to explore global trends in the world of work and also examine how globalisation and technological changes have affected the labour market in different sets of countries over the last 25 years or so. Using Labour Market data from ILO, it has been shown that globalisation has been associated with a phenomenal rise in GDP coupled with low population growth & rising PCI in major parts of the globe in recent times. But this striking economic boom has not been reflected in the labour market, especially in the low and middle income countries, which now have Unemployment rates higher than what was in 1990, even though LFPR itself has declined. There has happened large scale adoption of labour saving technology across the globe, as a result of which expansion & improvement of employment has not been up to the expected level. Instead of industrialisation, share of industry in GDP has declined in the developing world accompanied by a tremendous increase in the share of services in GDP – a sure sign of Missing middle phase of economic transformation. Globalisation indices used here are found to be significantly negatively associated with employment growth rates all throughout. Magnitude of the negative relation is stronger for middle income countries than the high income countries – indicating that the post-globalisation shock to labour market has been higher in developing countries rather than in developed countries. It is time to pay heed to saner academic voices and give a boost to domestic demand through larger government expenditure, rather than stick to a neo-liberal supply side fetish in the developing economies.

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