This paper contributes to the discussion of the impact of digital transformation on labour markets by analysing the impact on wage inequality. The novelty of this paper is on the one hand the quantitative approach that applies a macroeconometric input-output model which accounts for circular flow in the economy and feedback loops. Most of the studies on wage inequality and digital transformation focus on ex-post analysis. The applied quantitative model used in this paper also allows to perform ex-ante analysis. This is important, as economy 4.0 is not yet reflected in current datasets which makes statements about the impact of economy 4.0 on wage inequality on basis of ex-post analysis difficult. On the other hand, it uses the inequality measures S80/S20 that has been applied to a unique dataset on employment and wages. The dataset differentiates on industry and occupational level. That allows to identify industry*occupation combination and their location in the upper and/or lower 20 % share ratio of wage distribution. The analysis demonstrates that digital transformation increases wage inequality, however to a low extent. The increase in wage inequality is already implemented in the reference scenario due to structural and demographic change. Digital transformation strengthens the impact of structural change on wage inequality. Especially in the long run, wage inequality rises stronger than in the reference scenario. Because the digital transformation scenario does not confirm the polarization hypothesis, the impact of economy 4.0 on wage inequality remains rather low. The increasing demand of high-skilled employees is reflected in an increase in wage inequality. However, the relatively low impact of digitalisation on low-skilled employees prevents a stronger increase in wage inequality.

Publicly Available March 20, 2019

Digitalization, Multinationals and Employment: An Empirical Analysis of Their Causal Relationships

Antonio G. Gómez-Plana, María C. Latorre

Page range: 399-439

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Abstract

This study measures the effects of digitalization related to Information and Communication Technologies (ICT) investment on employment and other economic variables according to firms‘ ownership. We present two computable general equilibrium models (with full employment and with unemployment) which differentiate two types of firms: National and foreign multinationals (MNEs). Both types of firms allow for the substitution between labour and ICT capital. We conclude that ICT investments significantly create jobs and raise real wages, GDP and welfare. The aggregate positive effects are stronger for ICT investment in national firms than in foreign MNEs although the sign of some sectoral effects can be negative. We also analyze the role of wage flexibility in this context, with the most favorable results related to scenarios where wages are more rigid for both cases, when investors are national firms or foreign MNEs. The model is applied to the case of Spain, a country with a high unemployment rate where ICT investment has been large since the mid 1990s.

March 20, 2019

Controlling Working Crowds: The Impact of Digitalization on Worker Autonomy and Monitoring Across Hierarchical Levels

Elisa Gerten, Michael Beckmann, Lutz Bellmann

Page range: 441-481

Abstract

This study investigates the impact of information and communication technologies (ICT) on worker autonomy and monitoring using the second wave of the German Linked Personnel Panel, a linked employer-employee data set. From a theoretical point of view, the impact of ICT on workplace organization is ambiguous. On the one hand, the fast diffusion of ICT among employees makes it possible to monitor professional activities, leading to greater centralization. On the other hand, ICT enable employees to work more autonomously, so that workplace organization becomes more decentralized. Based on ordinary least squares and instrumental variable estimates, we find that ICT promotes both centralization and decentralization tendencies. Furthermore, managerial employees are more affected by ICT-induced monitoring and autonomy than their non-managerial counterparts. Finally, the effect of digital ICT on employee autonomy is more pronounced than the corresponding effect on employee monitoring. Again, this does especially hold for managerial employees. All in all, our results support the view that unlike prior technological revolutions digitalization primarily affects the employment prospects and working conditions of employees at medium and higher hierarchical levels.

Open Access June 21, 2019

The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany

Sabrina Genz, Markus Janser, Florian Lehmer

Page range: 483-521

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Abstract

The strong rise of digitalization, automation, machine learning and other related new digital technologies has led to an intense debate about their societal impacts. The transitions of occupations and the effects on labor demand and workers’ wages are still open questions. Research projects dealing with this issue often face a lack of data on the usage of new digital technologies. This paper uses a novel linked employer–employee data set that contains detailed information on establishments’ technological upgrading between 2011 and 2016, a recent period of rapid technological progress. Furthermore, we are the first to develop a digital tools index based on the German expert database BERUFENET. The new index contains detailed information on the work equipment that is used by workers. Hence, we observe the degree of digitalization on both the establishment level and the worker level. The data allow us to investigate the impact of technology investments on the wage growth of employees within establishments. Overall, the results from individual level fixed effects estimates suggest that investments in new digital technologies at the establishment level positively affect the wages of the establishments’ workers. Sector-specific results show that investments in new digital technologies increase wages in knowledge intensive production establishments and non-knowledge intensive services. The wage growth effects of employees in digital pioneer establishments relative to the specific reference group of workers in digital latecomer establishments are most pronounced for low- and medium-skilled workers.

Open Access June 5, 2019

Do German Works Councils Counter or Foster the Implementation of Digital Technologies?

First Evidence from the IAB-Establishment Panel

Sabrina Genz, Lutz Bellmann, Britta Matthes

Page range: 523-564

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Abstract

As works councils’ information, consultation and co-determination rights affect the decision process of the management, works councils play a key role in the implementation of digital technologies in establishments. However, previous research focuses on the potential of digital technologies to substitute for labor and its impact on labor market outcomes of workers. This paper adds the role of industrial relations to the existing literature by analyzing the impact of works councils on the implementation of digital technologies. Theoretically, the role of works councils in the digital transformation is ambiguous. Using establishment data from the IAB Establishment Survey of 2016 combined with individual employee data from the Federal Employment Agency and occupational level data about the physical job exposure, empirical evidence indicates an ambivalent position of works councils towards digital technologies. The sole existence of works councils is associated with statistically significant lower equipment levels with digital technologies. However, works councils seem to foster the equipment with digital technologies in those establishments, which employ a high share of workers who are conducting physical demanding job activities. Thus, this study highlights the importance of establishment-level workforce representation for the digital adoption process within Germany.

March 14, 2019

On-Demand Digital Economy: Can Experience Ensure Work and Income Security for Microtask Workers?

Uma Rani, Marianne Furrer

Page range: 565-597

Abstract

Digital labour platforms have been increasingly gaining popularity over the past decade. In particular, there has been much debate about workers’ motivations and working conditions on microtask platforms. There exists little evidence on whether dependence on digital microtask platforms provides workers with work and income security in the long term and whether it provides opportunities for skill development. This paper explores the extent to which the seemingly flexible platform work ensures work and income security and provides opportunities for skill development for workers with different levels of experience, based on novel survey data collected on five globally operating microtask platforms and in-depth interviews with workers. The findings show that despite high financial dependence on this work, returns to experience on the platform are meagre in terms of earnings, and highly experienced workers face the same risks as new entrants with regard to discrimination, high work intensity, lack of autonomy and control over work, and social protection. There is also a skills gap between the nature of tasks available on these microtask platforms and the workers’ education levels. Finally, experience does not ensure that workers have the opportunities to undertake complex and challenging tasks, and the possibilities to develop their skills and improve career prospects are limited.

About this journal

The Journal of Economics and Statistics (Jahrbücher für Nationalökonomie und Statistik) is a scientific journal published in Germany since 1863. The journal publishes papers in all fields of economics and applied statistics. A specific focus is on papers combining theory with empirical analyses. Papers providing conclusions for economic policy in Europe are particularly welcome. Nevertheless, distinguished papers dealing exlusively with economic theory, empirical models, or economic history, will not be excluded from consideration.

The editors invite replication studies focusing on the robustness of empirical findings. The section Data Observer presents articles on data sets available for empirical research and institutions providing research data. The journal also publishes special issues, short comments, and book reviews. All freely accessible contributions, including the Data Observer articles, can be found via the website's article search functionality.

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Call for Papers

Special Issue on "Sports Economics"

Guest Editors: Bernd Frick, Paderborn University; Thomas Peeters, Erasmus University Rotterdam; Rob Simmons, Lancaster University

Timeline: Submission of full papers November 30, 2023

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Special Issue on "Advancing Agent-Based Economics"

Guest Editors: Michael Neugart, Technical University of Darmstadt) and Frank Westerhoff, University of Bamberg

Timeline: Submission of full papers December 31, 2023

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Special Issue on "Central Bank Digital Currency"

Guest Editors: Katrin Assenmacher, European Central Bank and Michael Frenkel, WHU

Timeline: Submission of full papers January 08, 2024

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