The impact of a decade of digital transformation on employment, wages, and inequality in the EU: a “conveyor belt†hypothesis

Matteo Richiardi, Leonie Westhoff, Caterina Astarita, Ekkehard Ernst, Clare Fenwick, Neysan Khabirpour and Lorenzo Pelizzari

No CEMPA5/24, Centre for Microsimulation and Policy Analysis Working Paper Series from Centre for Microsimulation and Policy Analysis at the Institute for Social and Economic Research

Abstract: We study the effects of digital transformation in the EU on individual employment outcomes, wage growth, and income inequality, during the decade 2010-2019. Our results allow us to formulate a “conveyor-belt†hypothesis, whereas digital skills are important for finding a job, but less so for retaining it. The ability of out-of-work individuals with higher digital skills to jump back on the labour market is reduced for those with higher education, suggesting a faster depreciation of their digital skills. A similar effect, although of limited size, is found for earning growth: out-of-work individuals with higher digital skills are not only more likely to find a job, but experience higher earning growth, compared to their peers with lower digital skills. Our results point to a vulnerability of workers “left behind†from the digital transformation and the labour market. The overall effects on inequality are, however, limited.

Date: 2024-05-11
New Economics Papers: this item is included in nep-eec, nep-ict and nep-lma
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