The Impact of Technology Diffusion through Trade on Employment and Wages in the Manufacturing Industry in Sri Lanka

— This paper examines the impact of technology diffusion through trade on employment and wages in the manufacturing industry in Sri Lanka. The study models the effects of technology on employment and wages in the manufacturing industry in a labour demand and a wages framework on an integrated panel dataset of trade, labour and manufacturing industries. The impact of technology on employment and wages in the manufacturing industry is examined following the predictions of the Neo-technology trade theories. On the labour demand model, technology is negative and statistically significant on manufacturing employment against theoretical expectations. On the wages model, technology is positive and statistically significant on manufacturing wages as expected, confirming the neo-technology predictions