Technological advancement can displace workers with machines, but also create new jobs. Hence, at the crux of the matter lies a race between the rate of technological advancement and the pace at which educational institutions can empower workers with the right skills. For the countries of the South Asian region, generating jobs for youth will prove to be a challenge in the backdrop of the Fourth Industrial Revolution. This paper investigates the impact of technological advancement on youth unemployment in the context of six South Asian countries, namely, Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka. The results of the panel instrumental variables model estimations show that lower secondary completion rate has a negative relationship and capital–labour ratio has a positive relationship with the share of youth not in employment, education or training. However, since the magnitude of the coefficient of the lower secondary completion rate is greater than the magnitude of the coefficient of the capital–labour ratio, it is concluded that education will win the race against technology in South Asia, as long as the educational attainment rates are high enough to offset the impact of technical progress.
Authors:
Dr Fahmida Khatun, Executive Director, CPD
Syed Yusuf Saadat, Senior Research Associate, CPD
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