Information and communication technologies and employment in developing countries: Effects and transmission channels

Abstract

This study analyzes the effect of ICT adoption on employment in developing countries. The empirical analysis covers 70 developing countries over the 1996–2017 period. To better characterize the labor market framework in developing countries, the empirical analysis incorporates the impact of ICT adoption on underemployment and labor underutilization. Using panel data techniques, the results show that ICT adoption increases employment, underemployment, and labor underutilization in developing countries. The main transmission channels identified are FDI inflows, human capital, and economic openness. As the main policy implication, policymakers in developing countries should intensify investments in the ICT sector and develop policies conducive to FDI inflows, human capital development, and economic openness to address employment issues.