Research Article
Does ICT Investment Reduce Labor Demand: Evidence from OECD Countries
@INPROCEEDINGS{10.4108/eai.2-6-2023.2334685, author={Peijiang Zheng and Yang Li and Junjie Guo}, title={Does ICT Investment Reduce Labor Demand: Evidence from OECD Countries}, proceedings={Proceedings of the 2nd International Conference on Information Economy, Data Modeling and Cloud Computing, ICIDC 2023, June 2--4, 2023, Nanchang, China}, publisher={EAI}, proceedings_a={ICIDC}, year={2023}, month={8}, keywords={ict investment; substitution effect; compensation effect; labor demand; pvar analysis}, doi={10.4108/eai.2-6-2023.2334685} }- Peijiang Zheng
Yang Li
Junjie Guo
Year: 2023
Does ICT Investment Reduce Labor Demand: Evidence from OECD Countries
ICIDC
EAI
DOI: 10.4108/eai.2-6-2023.2334685
Abstract
ICT investment has both a negative substitution effect and a positive compensation effect on labor demand. This paper aims to analyze the mechanism behind this relationship by constructing a labor demand model and examine the dynamic effects by using PVAR model utilizing data from 18 OECD countries spanning the period 1995-2019. The findings indicate that ICT investment initially reduces labor demand in the current period but ultimately leads to an increase in labor demand in the long run. Furthermore, the study explores the impact of three categories of ICT subtypes on labor demand. The results reveal that the negative impact in the current period presents Software and Database > Communication Technology > Internet Technology, and the positive impact in the long term presents Software and Database > Internet Technology > Communication Technology. These results suggest that Software and Database exert a more substantial influence on labor demand. These empirical findings offer valuable insights in managing the relationship between digital economy development and ensuring stable employment.