technological unemployment

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Unemployment due to technical progress. This applies to particular types of worker whose skill is made redundant because of changes in methods of production, usually by substituting machines for their services. Technical progress does not necessarily lead to a rise in overall unemployment. New methods of production are economic to adopt only if they lower costs, which allows a larger output to be sold at a lower price. If the elasticity of demand is high enough, overall employment in the industry concerned may rise, as will employment in the industry producing the machines. It is still possible, however, for technological unemployment to afflict workers with old skills, if the new jobs created are either lower-grade operative jobs, or require skills they do not possess.

Subjects: Economics.

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