Technology, Automation, and Employment: Empirical Insights from the Indian Labour Market

Abstract

Economists have consistently examined the influence of technological change on labour market dynamics. Technological advancement fundamentally alters the capital–labour ratio within the production process, thereby affecting the magnitude, structure, and composition of employment. The nature and extent of these impacts depend largely on the type of technology introduced and its transformative effect on production — both in scale and intensity. In developing economies, labour markets are typically characterised by a predominance of unskilled and semi-skilled workers with limited educational attainment. The adoption of advanced technologies that require higher technical expertise and specialised skills often leads to a mismatch between labour supply and demand, creating short-term disruptions and adjustment challenges within the labour market. This issue has increasingly become a central theme in policy discourse concerning economic development. In the current era, the rapid diffusion of Artificial Intelligence (AI) and related technologies is reshaping the global economic landscape. However, these advancements also render younger and less experienced workers more vulnerable to employment instability, contributing to an uneven distribution of technological gains and thereby exacerbating global income inequalities.