The productivity and unemployment effects of the digital transformation: an empirical and modelling assessment

Abstract

For the last 30 years, the economy has been undergoing a massive digital transformation. Intangible digital assets, like software solutions, Web services, and more recently deep learning algorithms, artificial intelligence, and digital platforms, have been increasingly adopted thanks to the diffusion and advancements of information and communication technologies. Various observers argue that we could rapidly approach a technological singularity leading to explosive economic growth. The contribution of this paper is on the empirical and the modelling sides. On the empirical side, we present a cross-country empirical analysis assessing the correlation between the growth rate of both tangible and intangible investments and different measures of productivity growth. Results show a significant correlation between intangible investments and both labor and total factor productivity in the period after the 2008 financial crisis. Similarly, both measures of productivity growth are correlated with a combination of both tangible and intangible investments which include information and communication technologies and software and database. These results are used to inform the enrichment of the agent-based macro-model Eurace that we employ to assess the long-term impact on unemployment of digital investments. Computational experiments show the emergence of technological unemployment in the long run with a high pace of intangible digital investments.

The sustainability transition and the digital transformation: two challenges for agent-based macroeconomic models

“…The climate agent receives greenhouse gas emissions coming from economic activities, updates its internal variables, and then causes physical damages to the economy. DADs are a new population of agents that supplies software to the production sector used to improve productivity (for a more detailed presentation, please refer to Bertani et al 2020Bertani et al , 2021a.…”

“…In this respect, two different frameworks have been realized in order to represent the influence of digital technological progress on production processes. In the first framework presented in Bertani et al (2020Bertani et al ( , 2021a, a total factor augmenting approach is used. In this case, technological progress linked to digital assets determines an increase of the total factor productivity (TFP).…”

“…In the total factor augmenting framework, the technological progress influences the TFP of CGP production processes. This modeling assumption is underpinned by the empirical analysis carried out in Bertani et al (2020). In particular, along the line of the analysis presented in Haskel and Westlake (2017), it has been performed a correlation analysis between growth rates of different measures of productivity and investments for a sample of fifteen countries 6 .…”

Dijital Ekonomiye Geçiş Süreci, Ölçümü ve Dijitalleşme Verimlilik İlişkisi

“…Ayrıca yazılımın tek defa yapılmasının ardından kopyalanarak kullanılabilmesi, beşerî sermaye maliyetini de azaltmakta hatta neredeyse bu maliyeti sıfırlamaktadır. Yazılım gibi maddi olmayan dijital ürünlerin verimlilik üzerindeki etkilerini araştıranların ortak noktası dijital varlıkların, işgücü verimliliğini ve toplam faktör verimliliğini olumlu etkilediği yöndedir (Bertani, Raberto & Teglio, 2020).…”

Technological Disruptions, Youth Unemployment and Vocational Education Challenges in South Asia: A Short Report

“…Rapid technological progress provides immense opportunity for developing South Asian economies (Bingqin & Piachaud, 2019) to grow faster and attain higher income levels due to higher productivity growth driven by employing more workers through increasing skills complementary to technology, including digital skills and high-level cognitive skills and soft skills (Bertani et al, 2020;Sima et al, 2020). However, the existing skills-gap may constrain technology adoption and creation of new jobs (Prettner & Strulik, 2020).…”