Any time technology decreases unit production costs of a specific firm but is not (yet) adopted by rivals, the firm  quicker in technology adoption is more competitive, and this may lead to an increase of the market share, hence increase of production, and in turn this increases laboour productivity. Clearly if you have just substitution of labour with capital this doesn't happen, but if for a while there is a competitive advantage, you may get both increase of total factor productivity and of factor productivity.

From a micro perspective I would say it depends what the manufacturing technology is used for. If the technology is used for entering new markets or producing improved goods with e.g. an enhanced application field, than technology enables exploration rather than exploitation.

I think that this situation depends on the type of economy of each country. For example, if the economy is close to imports, for me is possible to produce with old machine using many manpower, but in the case of and open market, is difficult because people need machines with high productivity and this equipment normallly expel manpower.

we have made the experience of developing an electronic spinning whell, that having increased productivity without reducing the workforce.

If you want, you can see this work here in ResearchGate.

Thank you  Daniel. Please send me a link to your work.

The technology introduction it is not necessarily reducing the labour force(headcount). Let me make a today example referring to the Company to which we devolve the most of our research and development effort. We have increased the staff  number  of people and reduced the manpower one . The balancing effect is linked  to the increased amount of added value generation by the technology. E.g. you  may generate more value with the same turnover  but you should consider also how  the business structure of your Company changes valuewise!

Let me know eventually, if the concept  I am outlining here, is not expressed clearly  in this post.

kind regards

Alberto

From a sectorial point of view the technology growth doesn't displace the labour when the improvements in labour productivity push down the prices and generates an increase in demand enough to compensate the initial lost of jobs. The automotive industry is a good example.

I refer to this work: https://www.researchgate.net/publication/269996604_Modelo_de_intervencin_participativa_con_las_ruecas_a_motor_modelo_INTI

Conference Paper Modelo de intervención participativa con las ruecas a motor ...

within the context of SMEs, the influence of owner-manager (o/m) is prevalent. If the o/m want to invest in capital that leads toward improvement in technology (business improvement), he/she does it with full knowledge or awareness on what to happen to the company and in particular to the employees. Although the possibility of firing all employees and hiring new employees with the required knowledge is possible, I would say that all performing SMEs develop strong relationship between o/m and the employees. Thus, dropping employees because of technology enhancement is very very unlikely. It is more likely that the employees are sent for the required knowledge and skills.

I have the example but can not provide to you the hard evidence.What I can tell you is that I have observed many SMEs under the automotive vendor program in my country maintain the employees and some even hire more employees when they start to use new machine in their processing line. 

Perhaps, new technology usage is more likely due to further business growth and  thus reduction of employee is less likely.

Hope I contribute something to you.

 Niharika,

Of course, if there is a high unmet demand for the company's products, the purchase of highly productive equipment will lead to an increase in labor productivitywhile number of employees may not be reduced.

for example: If you are a rickshaw, after buying the car your labor productivity grows at a constant number of staff :)

You can have a look to the enclosed recent survey of mine.

Regards,

MV

Thank you Dr, Vivarelli for sharing your paper. I will read it.

Thank you Daniel for sharing your work. Do you have an English version to your work?

Excuse me, but only in spanish.

One can develop Federico Pablo-Martí's reasoning a little bit further. There are two effects of productivity increases: the labour saving effect and a compensating effect. The compensating effect is driven by the cost and price reduction due to the increase in productivity. Decreasing prices should increase product demand which increases labour demand. The net effect depends on the strength of the product demand reaction to price changes. Labour demand decreases, if product demand is inelsatic,  and labour demand increases (because of the increasing productivity), if product demand is elastic. You can find this reasoning in a more formal way here http://www.iab.de/389/section.aspx/Publikation/k140212301.

·         This reasoning descibes the productivity-employment relationship on the industry level, because, on firm/plant level there should be rather high (long-run) price elasticities, because of the process discussed by Massimo Florio.

It is a matter of great impact. At least, when small business invest in Technology Information, its administrative area can improve in productivity. Eventually, we can do all the work before with less people. But, in my view, in small businesses, a smart investment in this area shall not refer to layoffs of administrative staff - that relatively receive low wages - but do more. For example, enter in the e-commerce arena. That is, make a much larger volume of work with the same Human Resources that the company had before.

Some additional points to the good ones already provided.

There are no universals nor absolutes and you need to be clear as to the context and stage when making an assessment. With that in mind; a list of industries for you to ponder and investigate:

Airlines

Hotels

Telecoms

(certain assembly industries - especially high end: heavy vehicles; machine tools)

Consulting

Health care

Private equity

Digital Consulting/Branding/Advisory

Power generation

Oil&Gas

Security

Teaching/Academia

(certain government functions)

www.justinjenk.com

Have you looked into Harry Braverman's work?

Anuratha, thanks for the source of reference

Niharika,

Thanks for sharing that question. At a macro-level, Technology in its broadest sense, generally has improved the quality of the lives of humankind. Major disruptive technological breakthroughs eg the steam engine, or electricity, or the internet has improved the labour productivity of the world's workforce.

https://www.researchgate.net/publication/320546153_Quantifying_the_Productivity_Gains_from_Investing_in_Innovation_Technology_and_Managerial_Quality

Taht is a great idea to bring back this discussion to our attention.

If you want a concrete example, then Ford and its Model T would be a nice one. According to Hounshell (1984: 224) and Beaudreau (2008: 71) the production per empolyee increased from 8.4 units in 1909 to 20.9 unit in 1915, because of the introduction of the introduction of the assembly line. At the same time the number of employees rose from 1 700 to 19 000 and the number of sold units from 12 000 to 355 000.

This increase of sales and employment was not offset by losses of the other firms of the industry. First, in 1910 for example the sales for the total industry (including Ford) in the USA was far below Ford's sales in 1915. Second, the sales of most competitors increased as well, although by a much smaller rate.

The increase in labour demand is the consequence of a hugh market expansion due to the producitivty-price-demand-nexus discussed in previous posts (the price of the Moel T more than halfed in the period discussed). This is not specific to the automobile industry but a mechanism that can be observed since the begining of the industrial revolution, which was basically a productivity revolution, over and over again.