Technological change and labour demand

This thesis investigates the effect of technological change on employment structure and labour demand in the Central and Eastern European (CEE) catching-up countries. The results indicated that compared to Western Europe these countries are rather characterised by similar technology within industries and differ in terms of their industry structure. Microeconometric analysis on Estonian data demonstrated that technological change (product or process innovations) has a positive but insignificant effect on employment. While exporting to developed countries has on the one hand directly reduced the skill demand, it has on the other hand acted as a technology diffusion channel and increased the skill demand. The impact of technological change on overall employment is estimated to be much more positive. The innovation activity has a positive effect on employment at the firm and industry level. This thesis proposes also two novel empirical estimation strategies for the analysis of these issues.

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