Impact of Technological Change and Economic Factors on the Employment Level in South Africa

This study investigates the impact of technological change and economic factors on employment levels in South Africa from 1980 to 2023. The research explores how innovation, economic growth, investment, and education influence labor market dynamics, providing insights into effective policy measures for employment generation. The analysis utilizes annual data and applies advanced econometric techniques, including Vector Autoregression, Granger causality, Johansen cointegration, and Vector Error-Correction Models. Diagnostic tests ensure model robustness, while Impulse Response Functions and variance decomposition highlight dynamic relationships. The results indicate that technological innovation, has a positive but short-impact on employment growth. Education expenditure shows delayed but significant long-term effects, underscoring its importance in enhancing workforce skills. GDP growth consistently boosts employment, while investment demonstrates limited direct effects. Cointegration and IRFs reveal that economic and innovation shocks have varying temporal impacts on employment.