Jennifer Poole, The impact of digital technology on worker tasks: Do labor policies matter?
Between 1999 and 2006, Brazilian cities experienced strong growth in the provision of internet services, driven in part by the privatization of the telecommunications industry. A main concern of policymakers is that digital technology replaces routine, manual tasks, displacing lower-skilled workers that mainly perform these tasks. In Brazil, there are stringent labor market institutions that protect workers from such displacement. However, these regulations increase聽formal labor costs,聽limiting聽companies'聽ability to聽adjust聽the workforce to perform new tasks and to fully benefit聽from technology adoption.
A new co-authored article by SIS Professor Jennifer Poole uses administrative and survey data聽to show that,聽in response to a digital technology shock like the arrival of internet services, technology-intensive industries聽reduce their reliance on manual abilities and routine activities, relative to low-technology industries, thereby shifting the skill composition of industries and cities toward cognitive and non-routine tasks. In addition, Poole and her co-authors聽show聽that the strictness聽of the enforcement of labor market regulations within a country contributes to the skill shift. The fact that the differential increase in skill-intensive tasks largely occurs in high enforcement areas suggests that labor institutions are not actually protecting the most vulnerable (lower-skilled) workers
The results point to important changes in the future of labor markets in middle-income settings and show the potentially disruptive consequences of strict labor market policies.
Read the article .