The nuanced relationship between cutting-edge technologies and jobs: Evidence from Germany – Brookings Institution

by | May 5, 2022 | Jobs

Recent technological progress is fundamentally changing working environments by connecting physical and digital spheres. Connecting both spheres is enabled by augmenting automation with digitalization such that technology conducts work processes in a self-contained and automatic manner. Examples of such technologies include cyber-physical and embedded systems, smart factories, big data analytical tools, artificial intelligence (AI), and augmented reality (AR). Such cutting-edge technologies can perform work automatically and autonomously without human intervention, prompting fears of massive employment losses. Theoretically, the link between new technologies and employment is ambiguous. While most theories suggest that employment will grow on net, there is likely heterogeneity across workers, firms, and sectors of the economy (Agrawal et al., 2019; Barbieri et al., 2020).1 2 A growing literature has empirically investigated these issues mainly based on aggregate data for the economy and in specific industry sectors, but analyses at the level of firms and individual workers are rare (see the survey by Furman and Seamans, 2019).3 One likely reason for this gap in the literature is the scarcity of datasets that provide measures of the usage of advanced technologies at the firm level and accompanying workers’ outcomes. Such data are important to understand how these new technologies affect workers and firms.

Two German research institutes created a novel linked employer-employee dataset covering all industries in Germany to study the labor market consequences of the latest digital technologies, in …

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