The Impact of Digital Technologies on Routine Tasks : Do Labor Policies Matter?
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 firm...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/880331504875104459/The-impact-of-digital-technologies-on-routine-tasks-do-labor-policies-matter http://hdl.handle.net/10986/28364 |
| Summary: | 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. |
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