# **5. Economic transformation of labor market conditions**

ICT adoption presents important effects on firms’ labor structure, demand for labor, wages, and other labor outcomes (Iacovone and Pereira-López, 2018), creating new labor opportunities worldwide (OECD, 2008). Thus far, the literature shows that the skills in demand are changing towards ICTskills; however, at the same time, ICT adoption also brings wider benefits for the overall labor force. For instance, although ICT adoption by Mexican manufacturing firms has increased the demand for more high-skilled workers between 2008 and 2013, the wages increased for both skilled and unskilled workers (Iacovone and Pereira-López, 2018). Cusolito et al. (2020) look at manufacturing businesses in 82 developing countries from 2002-2019 and find that ICT adoption (particularly, email and website creation) is labor enhancing with a significant and positive correlation between ICT adoption and labor demand. This level of correlation is higher than the one from the variable managerial experience, and lower than the one from exporting activities. Such association could be explained by the productivity gains from digitization which affect product demand (e.g., through lower prices), lead to firms having more revenue, and requiring more labor. ICT can also affect the labor market by facilitating the matching process, like in Niger where people are calling acquaintances in flourishing labor markets to learn about job opportunities without having to incur transportation costs (Aker and Mbiti, 2010).

ICT’ labor effects might differ between developed and developing nations. Michaels et al. (2014) find that labor demand in the United States has shifted towards demand for college graduates and people with ICT skills since late 1980s and Akerman (2015) claims that adoption of broadband internet in Norway has also resulted in wage increases for high-skill workers. Czernich et al. (2011) find significant and positive correlations between internet adoption and wages in rich countries. Atalay et al. (2018) use newspaper ads that have been published between 1960 and 2000 in three main U.S. journals with wide readership nationally to measure the correlation between job tasks and ICT adoption. The authors find that ICT adoption has boosted analytic activities while decreasing manual tasks. Such an effect could potentially damage the employment prospects of unskilled low-income workers. This effect is also discussed by Eichhorst et al. (2016), who focus on the role of adoption in the transformation of occupations in Germany and other developed countries. The authors, however, note that the latest changes in the job market (e.g., new employment opportunities from internetbased marketplaces and self-employment opportunities) have been fostered not only by ICT adoption but also by globalization.

There is also an open debate identified across the literature on the effects of the internet regarding job creation and job matching. Although Czernich (2014) initially finds a negative relationship between Digital Subscriber Line (DSL) availability and unemployment in German municipalities, the results only hold under a linear model specification and therefore, the author concludes that the availability of broadband internet has no effect on unemployment. However, such results do not imply that the internet does not affect the overall labor market (e.g., through speeding the matching process and increasing employment, especially of offsite jobs). More recently, Hjort and Poulsen (2019) study the causal relationship between fast internet and employment rates using individual and firm-level data from 12 African countries, and compare individuals and firms located 16