Unemployment also can destabilize business expectations, as fears of low demand
cool private investment. Related to this, unemployment can also lead to technological
stagnation. If, as Marx and others suggest, high levels of employment stimulate technical
innovation, unemployment would be associated with less innovation. Firms with high
and stable levels of demand have the resources and the incentive to support going high
tech; with high unemployment and thus cheap labour, firms lack the resources and the
incentive to retool. It has also been shown that unemployment leads to deterioration in
labour skills. All of this suggests that unemployment may lead to lower productivity
growth.