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Does the Adoption of Complex Software Impact Employment Composition and the Skill Content of Occupations? Evidence from Chilean Firms

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  • Almeida, Rita K.

    (World Bank)

  • Fernandes, Ana Margarida

    (World Bank)

  • Viollaz, Mariana

    (CEDLAS-UNLP)

Abstract

A major concern with the rapid spread of technology is that it replaces some jobs, displacing workers. However, technology may raise firm productivity, generating more jobs. The paper contributes to this debate by exploiting a novel panel data set for Chilean firms in all sectors between 2007 and 2013. While previous studies examine the impacts of automation on the use of routine tasks by middle-educated workers, this study focuses on a measure of complex software that is typically used by more educated workers in cognitive and nonroutine tasks for client, production, and business management. The instrumental variables estimates show that in the medium run, firms' adoption of complex software affects firms' employment decisions and the skill content of occupations. The adoption of complex software reallocates employment from skilled workers to administrative and unskilled production workers. This reallocation leads to an increase in the use of routine and manual tasks and a reduction in the use of abstract tasks within firms. Interestingly, the impacts tend to be concentrated in sectors with a less educated workforce, suggesting that technology can constrain job creation for the more skilled workers there. The paper concludes that the type of technology matters for understanding the impacts of technology adoption on the labor market.

Suggested Citation

  • Almeida, Rita K. & Fernandes, Ana Margarida & Viollaz, Mariana, 2017. "Does the Adoption of Complex Software Impact Employment Composition and the Skill Content of Occupations? Evidence from Chilean Firms," IZA Discussion Papers 11016, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11016
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    Cited by:

    1. Rita K. Almeida & Carlos H. L, Corseuil & Jennifer Poole, 2017. "The Impact of Digital Technologies on Worker Tasks: Do Labor Policies Matter?," CESifo Working Paper Series 6798, CESifo.
    2. Tiare Rivera, 2019. "Efectos de la automatización en el empleo en Chile," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 34(1), pages 3-49, April.
    3. Julieta Caunedo & Elisa Keller & Yongseok Shin, 2023. "Technology and the Task Content of Jobs across the Development Spectrum," The World Bank Economic Review, World Bank, vol. 37(3), pages 479-493.
    4. Mariana Viollaz, 2017. "ICT Adoption in Micro and Small Firms: Can Internet Access Improve Labor Productivity?," CESifo Working Paper Series 6839, CESifo.
    5. Cusolito,Ana Paula & Lederman,Daniel & Pena,Jorge O., 2020. "The Effects of Digital-Technology Adoption on Productivity and Factor Demand : Firm-level Evidence from Developing Countries," Policy Research Working Paper Series 9333, The World Bank.

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    More about this item

    Keywords

    complex software; tasks; skills; employment structure; Chile;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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