Digitalization, Multinationals and Employment: An Empirical Analysis of Their Causal Relationships

Antonio Gómez-Plana and Latorre María C. ()
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Latorre María C.: Departamento de Economia Aplicada, Facultad de Estudios Estadísticos, Estructura e Historia, Universidad Complutense de Madrid, Avda. Puerta de Hierro 1, Madrid28040, Spain

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2019, vol. 239, issue 3, 399-439

Abstract: This study measures the effects of digitalization related to Information and Communication Technologies (ICT) investment on employment and other economic variables according to firms‘ ownership. We present two computable general equilibrium models (with full employment and with unemployment) which differentiate two types of firms: National and foreign multinationals (MNEs). Both types of firms allow for the substitution between labour and ICT capital. We conclude that ICT investments significantly create jobs and raise real wages, GDP and welfare. The aggregate positive effects are stronger for ICT investment in national firms than in foreign MNEs although the sign of some sectoral effects can be negative. We also analyze the role of wage flexibility in this context, with the most favorable results related to scenarios where wages are more rigid for both cases, when investors are national firms or foreign MNEs. The model is applied to the case of Spain, a country with a high unemployment rate where ICT investment has been large since the mid 1990s.

Keywords: computable general equilibrium; investment; information and communications technologies; employment; multinationals (search for similar items in EconPapers)
JEL-codes: C63 C68 J01 L63 L96 O14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:239:y:2019:i:3:p:399-439:n:2

DOI: 10.1515/jbnst-2017-0153

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