The Impact of Digital Technologies on Routine Tasks: Do Labor Policies Matter?

46 Pages Posted: 13 Sep 2017

See all articles by Rita Almeida

Rita Almeida

World Bank; IZA Institute of Labor Economics

Carlos Henrique Leite Corseuil

Institute of Applied Economic Research (IPEA)

Jennifer Poole

American University - School of International Service

Date Written: September 8, 2017

Abstract

There is a strong concern that technology is increasingly replacing routine tasks, displacing lower-skilled workers. Labor market institutions exist to protect workers from shocks but, by increasing labor costs, labor policy may also constrain firms from adjusting the workforce and, hence, from fully benefiting from technology adoption. This paper assesses the link between access to digital technologies and the demand for skills in the largest Latin American country, Brazil. Between 1996 and 2006, the country experienced a period of strong growth in Internet service provision, as well as in the enforcement of labor market regulations at the subnational level. The paper's empirical strategy exploits administrative data to assess the extent to which the adoption of digital technology affects employment and the skill content of jobs at the local level. In addition, the paper investigates whether the stringency of labor regulations influences this adjustment, by comparing the effect across industries subject to different degrees of enforcement of labor regulations. Using the fact that industries vary in the degree of reliance on digital technologies, the estimates suggest that digital technology adoption leads to a reduction in employment in local labor markets. The decrease in employment is larger for routine tasks, thereby shifting the composition of the workforce toward nonroutine, cognitive skills. However, and in contrast with labor policy intentions, the evidence points to the idea that labor market regulations differentially benefit the skilled workforce, particularly those workers employed in nonroutine, cognitive tasks.

Keywords: Science Education, Technology Industry, Technology Innovation, Scientific Research & Science Parks, Rural Labor Markets, Innovation, Scientific Information & Communications Technologies, Science Mathematics and Technology, Biotechnology, General Technology, Science Policies

Suggested Citation

Almeida, Rita and Leite Corseuil, Carlos Henrique and Poole, Jennifer, The Impact of Digital Technologies on Routine Tasks: Do Labor Policies Matter? (September 8, 2017). World Bank Policy Research Working Paper No. 8187, Available at SSRN: https://ssrn.com/abstract=3034542

Rita Almeida (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Carlos Henrique Leite Corseuil

Institute of Applied Economic Research (IPEA) ( email )

Av. Presidente Antonio Carlos 51
14 andar, Castelo
RJ 20020-010 Rio de Janeiro
Brazil
+55 21 3804-8000 (Phone)
+55 21 2240-1920 (Fax)

Jennifer Poole

American University - School of International Service ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

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