Job Composition and Its Effect on UK Firms in the Digital Era

37 Pages Posted: 2 Dec 2019

Date Written: November 2019

Abstract

This paper studies how the adoption of digital technologies has changed the employment structure of UK firms. While the scientific literature traditionally has shown inconclusive results about who is winning the race between man and machine, we argue that currently there are reasons to be less pessimistic about the effect of technology on labor. Drawing on an employer-employee panel survey in 2004 and 2011 in the UK, this study shows that the effect of the firms’ routine exposure on employment and wages varies according to the skill content of occupations and by sectors. Our results suggest that firms’ concentration on routine cognitive jobs does not generate outright job-losses and could even have a positive effect on overall employment at firm-level. On the other hand, firms exposed to routine manual task jobs are more at risk of generating a negative impact on firms’ labor, mainly decreasing their workforce. While the concentration of routine occupations has a job-creating effect in the tertiary sector, this does not necessarily imply consistent job-losses within the secondary sector. Finally, we conclude that the investment in routine workforce without the appropriate technological adoption is not enough to generate positive effects on labor at firm-level, specifically in the manufacturing sector.

Keywords: digitalisation, employment, wages, digital technologies, routine jobs, firm, UK

Suggested Citation

Sanchez Barrioluengo, Mabel, Job Composition and Its Effect on UK Firms in the Digital Era (November 2019). SWPS 2019-24, Available at SSRN: https://ssrn.com/abstract=3495542 or http://dx.doi.org/10.2139/ssrn.3495542

Mabel Sanchez Barrioluengo (Contact Author)

Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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