Innovation and Employment

"According to the "compensation theory", market forces should assure a complete compensation of the initial labour-saving impact of process innovations. In this paper a critique of this approach is proposed through a detailed survey of the theoretical and empirical literature on the subject. The general conclusion is that -- although compensation is always working -- the complete counter-balancing of dismissed workers cannot be assumed ex-ante"--Forschungsinstitut zur Zukunft der Arbeit web site.