Interlinkages Between Technological Progress, Unemployment and Labour Productivity: Insights From the Solow Residual Model on Sustainable Economic Development

Abstract This study finds whether there exists any correlation between the rates of technological progress, unemployment and labour productivity among a total of 21 world economies that are categorized as developed, developing and least developed by the United Nations. An attempt has also been made to check the reliability of the model through regression analysis. Time series analysis has been conducted over 19 years, from 2000 to 2018. The Solow Residual Method based on the Cobb Douglas Production function has been used and modified to find the rate of contribution of technological progress towards Gross Domestic Product (GDP) for each country. Correlation analysis has been conducted to measure the degree of correlation between the variables and trend analysis has been used to identify the exact directions in which the variables are moving. Further, regression analysis has been conducted to check whether the identified strength of the relationship between the dependent and the independent variables can be well justified or not. There is an unsustainable economic development when the contribution of technology to a nation's GDP increases in tandem with an increase in the rate of unemployment. A country is said to have sustainable economic development when the rate of contribution of technical advances to GDP growth drops or if it grows but with a lower unemployment rate.