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School of Information Studies
School of Information Studies
The impact of ICTs on employment in
Latin America: A call for ...
School of Information Studies
Research Question
• Will ICTs negatively affect employment in
Latin America?
• Is the region...
School of Information Studies
Distribution of employment
0
20
40
60
80
100
120
ARG BRB CHL COL CRI CUB DOM ECU SLV HND JAM...
School of Information Studies
Technology and employment
School of Information Studies
Technology and employment
• The rate of unemployment is greater than
in previous periods of ...
School of Information Studies
Martha Garcia-Murillo (mgarciam@syr.edu)
Less than 1.4 11.2 or more Less than 59.9 66.1 or m...
School of Information Studies
Martha Garcia-Murillo (mgarciam@syr.edu)
Contributing factors
School of Information Studies
Hypothesis
• H1: ICTs will negatively affect employment
• H2: A more highly educated populat...
School of Information Studies
Education
• Education reduces the risk of
unemployment (Mincer, 1991).
• A high level of edu...
School of Information Studies
H2: A more highly educated population is
more likely to find employment
Less than 3.5 6.3 or...
School of Information Studies
Negative: Elementary education
Bolivia
Chile
Argentina
Uruguay
Peru
Haiti
Panama
El Salvador...
School of Information Studies
Research and development
• Latin America generated 8.7 percent of
world GDP in 2013 but it o...
School of Information Studies
H3: The higher the amount of research and
development the higher the levels of employment
Le...
School of Information Studies
Business
• ICTs can make operations more efficient
and potentially displace workers.
• In th...
School of Information Studies
Less than 0.6 5.3 or more
NEW BUSINESS DENSITY (NEW REGISTRATIONS
PER 1,000 PEOPLE AGES 15-6...
School of Information Studies
Government: Labor laws
• Countries with few if any protection are also
not good for job crea...
School of Information Studies
Government: Labor laws
• Labor rigidities also reduce productivity of
workers because they a...
School of Information Studies
Less than 14.0 22.0 or more
Less than 110.2 456.9 or more
PAID ANNUAL LEAVE FOR A WORKER 5 Y...
School of Information Studies
Bureaucracies
• Regulation, can be intrusive, and
overwhelming to the point of discouraging
...
School of Information Studies
H7: The more bureaucratic a country, the
lower the level of employment.
Less than 53 134 or ...
School of Information Studies
Negative: Bureaucracies
Cuba
Puerto Rico
Mexico
Uruguay
JamaicaChile
Panama
Colombia
Hondura...
School of Information Studies
Negative: capital formation
Puerto Rico
Cuba
El Salvador
Guatemala
Paraguay
Trinidad and Tob...
School of Information Studies
Mobile
Cuba
Haiti
Mexico
Bolivia
Nicaragua
Puerto Rico
Dominican Republic
Costa Rica
Venezue...
School of Information Studies
Business
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
ICTs EducationR&
D
Busine
ss
Labor
laws
Bureaucr...
School of Information Studies
Conclusions
• The region
• Its bureaucracies need to improve to facilitate business
creation...
School of Information Studies
Conclusions
• The region is low in broadband. The effect is
positive as this being a multi-p...
School of Information Studies
Martha Garcia-Murillo (mgarciam@syr.edu)
Thank You
Martha Garcia-Murillo
Syracuse University...
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The impact of ICTs on employment in Latin America

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The purpose of this research is to determine the impact on employment from information and communication technologies. Prior research has shown that both communication and automation are
displacing jobs, mainly those with middle-level skills.
ICTs are currently generating employment in developing countries as they make business and government operations more efficient but this may not be the case in the long term given Latin Americas’ weak economic and political environment. The region could be relegated to offer low wage services, potentially increasing poverty in the region.
A statistical analysis of a panel of 23 Latin American countries over a 20 year period indicates that mobile phones do not appear to be either helpful or harmful to service employment. Broadband, because penetration is low, it is not surprising that is shows a positive effect. Education is significant and negative, which could be explained by low levels of education as all
of the countries in the study are listed close to the bottom of the PISA rankings. Other factors that
negatively impact employment are capital formation, burdensome bureaucracies and corruption.
The paper concludes with policy recommendations.

Published in: Economy & Finance
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The impact of ICTs on employment in Latin America

  1. 1. School of Information Studies School of Information Studies The impact of ICTs on employment in Latin America: A call for comprehensive regulation Martha Garcia-Murillo TPRC, September 2014 Washington, DC
  2. 2. School of Information Studies Research Question • Will ICTs negatively affect employment in Latin America? • Is the region ready for a digital world?
  3. 3. School of Information Studies Distribution of employment 0 20 40 60 80 100 120 ARG BRB CHL COL CRI CUB DOM ECU SLV HND JAM MEX NIC PAN PRY PER PRI URY VEN ArgentinaBarbados Chile ColombiaCosta RicaCubaDominican RepublicEcuadorEl SalvadorHondurasJamaicaMexicoNicaraguaPanamaParaguay PeruPuerto RicoUruguayVenezuela, RB Employment in agriculture (% of total employment) Employment in industry (% of total employment) Employment in services (% of total employment) 57.2 % 24% 18%
  4. 4. School of Information Studies Technology and employment
  5. 5. School of Information Studies Technology and employment • The rate of unemployment is greater than in previous periods of technology advancement. (Chorafas, 2011) • In the last two decades employment in the European Union has increased substantially for those with limited skills (Chorafas, 2011)
  6. 6. School of Information Studies Martha Garcia-Murillo (mgarciam@syr.edu) Less than 1.4 11.2 or more Less than 59.9 66.1 or more LABOR FORCE PARTICIPATION RATE (% OF TOTAL POPULATION AGE 15+) FIXED BROADBAND INTERNET SUBSCRIBERS (PER 100 PEOPLE (2011) Technology and employment
  7. 7. School of Information Studies Martha Garcia-Murillo (mgarciam@syr.edu) Contributing factors
  8. 8. School of Information Studies Hypothesis • H1: ICTs will negatively affect employment • H2: A more highly educated population is more likely to find employment • H3: The higher the amount of research and development the higher the levels of employment • H4: New businesses will positively affect employment levels. • H5: Capital investments will negatively affect employment as they are more likely to be labor saving • H7: The more bureaucratic a country, the lower the level of employment. • H6: Labor regulation in Latin America negatively impacts employment
  9. 9. School of Information Studies Education • Education reduces the risk of unemployment (Mincer, 1991). • A high level of education has been found to result in three benefits: a higher wages, greater upward mobility in both income and occupation as well as greater employment stability (Sicherman, 1990) • A difficulty: unemployment may deter education
  10. 10. School of Information Studies H2: A more highly educated population is more likely to find employment Less than 3.5 6.3 or more Less than 59.9 66.1 or more PUBLIC SPENDING ON EDUCATION, TOTAL (% OF GDP) LABOR FORCE PARTICIPATION RATE (% OF TOTAL POPULATION AGE 15+)
  11. 11. School of Information Studies Negative: Elementary education Bolivia Chile Argentina Uruguay Peru Haiti Panama El Salvador Mexico Cuba Colombia Trinidad and Tobago Puerto Rico Brazil Costa Rica Ecuador Jamaica Dominican Republic Venezuela, RB Guatemala Honduras Paraguay Nicaragua 20406080 20 30 40 50 60 Labor force with primary education (% of total) bandwidth = .8
  12. 12. School of Information Studies Research and development • Latin America generated 8.7 percent of world GDP in 2013 but it only generated 0.19 percent of patents (Ketelhöhn & Ogliastri, 2013) and the entire region produced the same number of patents as those in Spain. • More research and development in the region country can be beneficial at a time when technology is evolving rapidly
  13. 13. School of Information Studies H3: The higher the amount of research and development the higher the levels of employment Less than 0.3 2.2 or moreResearch and development expenditure (% of GDP)
  14. 14. School of Information Studies Business • ICTs can make operations more efficient and potentially displace workers. • In the US large companies generated most of the jobs created and destroyed in manufacturing in the 1972-1988 period. They also find that the amount of jobs created increases as the company also increases in size (Davis & Haltiwanger).
  15. 15. School of Information Studies Less than 0.6 5.3 or more NEW BUSINESS DENSITY (NEW REGISTRATIONS PER 1,000 PEOPLE AGES 15-64 H4: New businesses will positively affect employment levels. H5: Capital investments will negatively affect employment as they are more likely to be labor saving
  16. 16. School of Information Studies Government: Labor laws • Countries with few if any protection are also not good for job creation due to job destructions and lack of desire to invest in education (Charlot & Malherbet). • In Latin America employers in the region would increase the workers by 2% if labor regulations were more flexible (Kaplan, 2009).
  17. 17. School of Information Studies Government: Labor laws • Labor rigidities also reduce productivity of workers because they are not able to change jobs more rapidly to firms where their skills will make them more productive Caballero et al. (2006), Gonzaga (2003), Haltiwanger et al. (2006), and Micco and Pagés (2007). • That the majority (83.2%) do not hire or fire workers as a result of rigid labor regulations.
  18. 18. School of Information Studies Less than 14.0 22.0 or more Less than 110.2 456.9 or more PAID ANNUAL LEAVE FOR A WORKER 5 YEARS OF TENURE (IN WORKING DAYS) MINIMUM WAGE FOR A 19 YEAR OLD OR APPRENTICE (US$/MONTH) H6: Labor regulation in Latin America negatively impacts employment
  19. 19. School of Information Studies Bureaucracies • Regulation, can be intrusive, and overwhelming to the point of discouraging business creation or forcing employers to hire people informally, for example, in order to avoid paying the costs of labor compliance (Mazumdar, 1976).
  20. 20. School of Information Studies H7: The more bureaucratic a country, the lower the level of employment. Less than 53 134 or more Less than 480 892 or more EASE O DOING BUSINESS INDEX (1=EASIEST ,185=MOST DIFFICULT) TIME REQUIRED TO ENFORCE A CONTRACT (IN DAYS)
  21. 21. School of Information Studies Negative: Bureaucracies Cuba Puerto Rico Mexico Uruguay JamaicaChile Panama Colombia Honduras El Salvador Dominican Republic Argentina Peru Paraguay Guatemala Nicaragua Trinidad and Tobago Bolivia Ecuador Costa Rica Brazil Haiti Venezuela, RB 20406080 -50 0 50 100 150 Time required to start a business (days) bandwidth = .8 Running mean smoother
  22. 22. School of Information Studies Negative: capital formation Puerto Rico Cuba El Salvador Guatemala Paraguay Trinidad and Tobago Bolivia Brazil Argentina Uruguay JamaicaCosta Rica Mexico Venezuela, RB Nicaragua Chile Colombia Panama Peru Honduras Dominican Republic Haiti Ecuador 20406080 10 15 20 25 30 Gross fixed capital formation, private sector (% of GDP) bandwidth = .8
  23. 23. School of Information Studies Mobile Cuba Haiti Mexico Bolivia Nicaragua Puerto Rico Dominican Republic Costa Rica Venezuela, RB Colombia Paraguay Ecuador Honduras Jamaica Peru Brazil Chile Guatemala El Salvador Trinidad and Tobago Uruguay Argentina Panama 20406080 0 50 100 150 200 Mobile cellular subscriptions (per 100 people) bandwidth = .8
  24. 24. School of Information Studies Business -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 ICTs EducationR& D Busine ss Labor laws Bureaucra cy Econom ic
  25. 25. School of Information Studies Conclusions • The region • Its bureaucracies need to improve to facilitate business creation. • Businesses are generating employment • Inequality may be creating service employment at both ends of the spectrum (very rich and very poor) • The region needs to invest in education to improve both employment and inequality • All these issues are interconnected and will need a more comprehensive regulatory/policy approach
  26. 26. School of Information Studies Conclusions • The region is low in broadband. The effect is positive as this being a multi-purpose technology opens multiple opportunities for employment. • Mobile phones are a coordination technology not a job creation technology. • Education does not appears alleviate unemployment
  27. 27. School of Information Studies Martha Garcia-Murillo (mgarciam@syr.edu) Thank You Martha Garcia-Murillo Syracuse University School of Information Studies USA mgarciam@syr.edu

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