Digitalization and the Labor Market
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Digitalization and the Labor Market Jiřina Bokšová 1
& Michal
Bokša 1 & Josef Horák 1
# International Atlantic Economic Society 2020
JEL J21 The fourth industrial revolution will likely have widespread ramifications for the economy. Over the past three decades, emerging technologies have buttressed growth and positively affected employment. Nonetheless, the digitalization era is likely to disrupt this equation, with labor markets facing increasingly negative consequences. Further robotization and automatization are predicted to progressively substitute for a considerable share of the human workforce. This research is predominantly a theoretical analysis focusing on the Central and East European (CEE) digitalization dilemma as local countries are intrinsically driven to digitalize their economies while potentially facing labor market ramifications for doing so. Currently, the CEE countries, namely the Czech Republic, Hungary, and Poland, enjoy a low unemployment rate which by June 2018 stood at 2.4%, 3.6% and 3.7%, respectively. Workforce shortages not only drive local salaries to new levels, but simultaneously promote the adoption of revolutionary technologies. However, local labor markets remain heavily dependent on the industrial sector. In 2017, employment in industry as a percentage of total employment in the individual CEE countries ranged from 30% in Hungary to 38% in the Czech Republic. Currently, there are two key theoretical viewpoints regarding automation risks for the labor market, each arriving at different conclusions. First, Bessen (How Computer Automation Affects Occupations: Technology, Jobs, and Skills, Working paper, 2015), Graetz & Michaels (Robots at Work, 2015), and Gaggl & Wright (American Economic Review: Applied Economics, 2017) maintain that no clear negative causation has been identified between automation and rising unemployment. In addition, numerous reports indicate that the vast and negative consequences caused by labor market digitalization, are vastly over exaggerated and inflated. Furthermore, this group often presumes that digitalization will not occur suddenly in the short term, but instead will be epitomized
* Jiřina Bokšová [email protected]
1
ŠKODA AUTO University, Na Karmeli 1457, Mladá Boleslav, Czech Republic
Bokšová J. et al.
by a medium-to-long-term process within which labor markets will be able to react to changes, creating new jobs in different sectors of the economy with sufficient speed to make the potential negative consequences relatively absorbable. The second group includes authors and studies, such as those of Frey et al. (The Future Of Employment: How susceptible Are Jobs to Computerisation?, 2013), Arntz et al. (The Risk of Automation for Jobs in OECD Countries, Working Paper, 2016), and Acemoglu & Restrepo, (Journal of Political Economy, 2020), all of which generally assert that vast negative effects of automation on employment exist and will ineluctably follow putting affected labor markets under considerable pressure. Frey & Osborne (2017) und
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