 Digital adoption, automation, and labor markets in developing countriesAlan Finkelstein Shapiro and Federico Mandelman Journal of Development Economics, 2021, vol. 151, issue C Abstract: We study how digital adoption by firms—a precursor to automation—shapes the labor market structure and worker outcomes in developing countries. Using a large sample of developing countries, we document a strong and negative link between firm digital adoption and self-employment rates. This relationship persists even after controlling for the level of development and other factors associated with the distinct employment structure of developing countries. In contrast, there is no link between digital adoption and unemployment rates. We develop a model with equilibrium unemployment, self-employment, endogenous firm entry, and information-and-communications technology (ICT) adoption, and show that positive linkages between the cost of technology adoption (and therefore technology adoption itself) and salaried-firm entry costs are crucial for rationalizing the empirical relationship between firm digital adoption and self-employment. Keywords: Information and communications technologies; Automation; Labor search frictions; Self-employment; Unemployment; Endogenous firm entry; Developing countries (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:151:y:2021:i:c:s0304387821000353 DOI: 10.1016/j.jdeveco.2021.102656 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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