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I quote from India's Economic Survey 2019 (an official document) -

While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific activity. When examined across the entire value chain, capital investment fosters job creation as the production of capital goods, research & development and supply chains generate jobs.

The immediate affect of investment is displacement of jobs due to increase in productivity.

Even if we look at the entire value chain, the new jobs created will require new skills. Is there any reason to claim the net affect on job loss is not significant?

For example, when IT revolution displaced clerical work, did it create enough jobs to absorb all those clerks? (I know it must have in the next 20 or 30 years but during the interim period there was significant job loss right?)

I want to clarify that I am not arguing against investment because of the potential job losses. I understand that regardless of job losses, investment and productivity gains are inevitable.

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  • $\begingroup$ "The immediate affect of investment is displacement of jobs due to increase in productivity" sounds close to the "lump of labour" theory, often described as a fallacy $\endgroup$ – Henry Aug 5 at 22:11
  • $\begingroup$ Some basic job search models back this claim $\endgroup$ – EconJohn Aug 8 at 12:18

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