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.

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. School of Information Studies
Research Question
• Will ICTs negatively affect employment in
Latin America?
• Is the region ready for a digital world?

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. School of Information Studies
Technology and employment

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. 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. School of Information Studies
Martha Garcia-Murillo (mgarciam@syr.edu)
Contributing factors

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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