Does ICT Industry Experience Jobless Growth? Empirical Evidence From OECD Economies

Abstract

The role o f Information and Communication Technology (ICT) industry is of rising importance, as it highly contributes to technological accumulation, and hence economic growth in economies. Even though expansion o f any industry or economy is expected to generate employment; many studies confirm that, economic growth is not always capable o f creating employment opportunities. Examination o f this issue, i.e. jobless growth, specifically in the ICT industry is beneficial as it requires highly-skilled labor. This study aims to empirically explore how output growth is successful at creating employment, and tests the existence ofjobless growth in ICT industry in OECD economies for the 1999-2016 period. The study first distinguishes the reaction o f employment to output growth in ICT industry, total industry and the overall economy; and then tests the lagged effects on each aggregate. After that, it divides the time-period into two sub-periods: 1999-2007 and 2008-2016, to explore the impact o f the 2008 Global Economic Crisis. The findings indicate significant, positive, yet quite low employment elasticity coefficients for the ICT industry and the overall economy. The coefficients rise slightly, and the coefficient o f total industry becomes significant with time lags. The findings emphasize that the impact of output growth on employment is the lowest in the ICT industry, compared to those of others. 1 % output growth yields only 0.21% increase in employment without lagged effects, and it reaches only to 0.343% after three years in the relevant industry. The findings also show that, the impact of wages on ICT employment is significant, yet mostly positive, as opposed to the theory; and the impact o f ICT exports is statistically insignificant. These results clarify that; even though output growth generates some employment in the ICT industry, it is not at sufficient levels and it has worsened after the 2008 Crisis, as expected.