Investment in ICT, Productivity, and Labor Demand: The Case of Argentina

48 Pages Posted: 1 Feb 2018 Last revised: 11 Apr 2018

Irene Brambilla

Universidad Nacional de La Plata

Dario Tortarolo

University of California, Berkeley - Department of Economics

Date Written: January 31, 2018

Abstract

This paper explores the impact of the adoption of information and communications technology on firm performance and labor market outcomes using a firm survey from the manufacturing sector in Argentina. The findings are that at the firm level adoption of information and communications technology leads to increases in firm productivity and wages, and that the effects are heterogeneous across firms, being larger for initially high-productivity and high-skill firms. The increase in wages occurs even after controlling for skill composition, implying that there are productivity and rent-sharing mechanisms at play. Further findings show that adoption of information and communications technology is associated with employment turnover as captured by the replacement of workers, elimination of occupations, creation of new occupations, and decrease in the share of unskilled workers, supporting the view that ICT is complementary with skilled labor. At the same time, there is an increase in employment across all skill categories. This result is compatible with positive output effects that drive employment, and with job turnover within the unskilled group.

Suggested Citation

Brambilla, Irene and Tortarolo, Dario, Investment in ICT, Productivity, and Labor Demand: The Case of Argentina (January 31, 2018). World Bank Policy Research Working Paper No. 8325. Available at SSRN: https://ssrn.com/abstract=3115831

Irene Brambilla (Contact Author)

Universidad Nacional de La Plata ( email )

La Plata, Buenos Aires 1900
Argentina

Dario Tortarolo

University of California, Berkeley - Department of Economics ( email )

CA
United States

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