Labor Markets in the Digital Economy: Modeling Employment from the Bottom-Up

Abstract

Four studies on ICT labor markets show how technology makes a difference to growth. Different skills are entrenched into the broader economy in their own ways. Technologies in mature manufacturing industries change slowly and employment growth has smaller knock-on effects than those in new sectors, such as smartphone services. Cloud computing reduces and redeploys in-house information management workers but the total effect, even with a conservative view of productivity gains, is unlikely to reduce total employment of technically skilled people. We see modest growth mostly but significant gains in local areas, as in the boost to London’s labor market brought on by “digital London”. The fact that employment grows as we have described addresses the common, often shrill, warnings about skills shortages.

I acknowledge the collaboration of Patrik Karrberg of the LSE worked with me on three of the studies upon which this chapter is based, Michael Mandel of the Progressive Policy Institute on another, and Robert B. Atkinson, Daniel Castro and Stephen Ezell all of the Information Technology and Innovation Foundation on others.