Are ICT Displacing Workers? Evidence from Seven European Countries

Abstract

This paper examines whether ICT substitute labour and reduce the demand for labour. We used firm-level comparable data separately for firms in manufacturing, services and ICT-producing sectors from seven European countries. We adopted a common methodology and applied it to a unique dataset provided by the ESSLait Project on Linking Microdata. We controlled for unobservable time-invariant firm-specific effects and we found no evidence of a negative relationship between intensity of ICT use and employment growth. We read this as an indication that ICT use is not reducing employment among ICT using firms.

Keywords: Labour Demand, Technology Change, ICT

JEL Classification: J23, J24, O33, L86