The Impact of ICTs on Employment in Latin America: A Call for Comprehensive Regulation
34 Pages Posted: 2 Apr 2015 Last revised: 16 Aug 2015
Date Written: March 31, 2015
The purpose of this research is to determine the manner in which employment will evolve as a result of developing information and communication technologies (ICTs). Prior research has shown that both communication and automation are displacing certain type of employment, mainly those with middle level skills. Given the evidence from countries with greater penetration of ICTs, we expect Latin America to follow a similar path and potentially be negatively affected by the elimination of some professions.
Researchers that have analyzed the impact of ICTs on employment have found that there has been a gradual move from agriculture, to manufacturing and to services with service economies being the latest iteration in development. The economic prospects for these service economies, however, will depend on the composition of the service professions. Ideally societies should aim to employ people in professions that require higher level skills as they would likely result in higher incomes and improved development prospects.
ICTs are currently generating employment in the Latin American region and this is likely to remain the case for some years as these technologies make business and government operations more efficient. It is unclear whether this will continue to be the case in the long term given weaknesses in the region’s economic and political environment. Latin America could be relegated to providing simple services that pay low wages, potentially increasing poverty in the region.
Using statistics from the World Bank the author has developed a panel of Latin American countries over a 20 year period to allow for comparisons across countries, and to determine if countries that have invested in education and R&D also benefited from service employment with higher level skills.
Initial results indicate that broadband communications, has a positive effect on employment and is likely to continue to do so as this technology is not yet widely deployed. Wireless connectivity, on the other hand, was not significant. Factors that are found to negatively impact employment were as expected capital formation, corruption, education which can be explain for the poor quality that still prevails in the region. Factors found to positively affect employment ICT imports, the creation of new business, ease of doing business, labor protections like paid leave.
The paper concludes with policy recommendations.
Keywords: ICTs, Latin America, technological advance, unemployment
JEL Classification: D31,E24,N36,O33
Suggested Citation: Suggested Citation