Information Technology Skills and Labor Market Outcomes for Workers

Abstract

Job erosion is a major concern globally, especially given the COVID-19 pandemic. Unemployment and low wages remain pressing societal challenges in the wake of increased automation, more so for traditionally disadvantaged groups in the labor market, such as women, minorities, and the elderly. However, workers who possess relevant information technology (IT) skills may have an edge in an increasingly digital economy. In this study, we examine the role of IT skills in labor market outcomes for workers, using a household IT use survey from an emerging economy that captures detailed, individual-level data on IT skills, which are also integrated with data on workers’ wages, occupations, and industries between 2007 and 2015. The results indicate that basic IT skills increase individuals’ employment probability, which is driven by both higher labor force participation and a higher probability of transitioning from unemployment to employment, after accounting for the decision to participate in the workforce. Advanced IT skills do not provide a significant incremental effect on employment probability on top of basic IT skills. However, having advanced IT skills helps workers to earn higher wages while incrementally increasing the probability that they are employed in higher-paid jobs. Interestingly, the effect of basic IT skills on employment is significantly larger for the female and older workforce that typically has a higher preference for flexible work options. These results emphasize the importance of providing necessary IT access and offering basic IT training to traditionally disadvantaged groups to close the IT skills gap and the digital divide. We offer implications for the future of work, education, and public policy for designing IT training policies for workers, students, and organizations to stimulate employment with higher wages, particularly in developing economies and for traditionally disadvantaged segments of the workforce, such as women and the elderly, particularly after the COVID-19 pandemic.