Disruptive Technology, Skills and Tasks: Evidence from Indonesia

This paper examines the relative prices of tasks following the recent and rapid adoption of new technologies in workplaces. In documenting the relationship between tasks, occupations and wages in Indonesia, we classify tasks into four groups: technological, routine manual, routine cognitive and non-routine interpersonal. Labour supply model estimates reveal that a one-standard-deviation increase in non-routine interpersonal tasks correlates with a 4.1% wage increase, while the same increase in routine manual tasks results in a 2.5% wage decrease. The research presents mixed findings on the employment effects of technology: firms with high technological intensity tend to employ fewer high-skilled workers, suggesting complementarity between current technology and low-skilled labour. Conversely, highly innovative firms are more likely to employ high-skilled workers, indicating a complementarity between innovation and high-skilled labour. Overall, these findings align with task pricing patterns observed in developed countries, contributing to the understanding of the impact of technology on labour markets in developing economies.