The Probability of Profession Computerization and Its Impact on Wage Differentials: Case of the Russian Labor Market Digitization

Abstract

AbstractThis study aims to analyze the impact of digitalization on the labor market in Russia in the long term from 2003 to 2018. The authors examine two essential factors of the national economy digital transformation, first, it is an increase in the probability of computerization for a number of routine professions, and second, it is digital polarization of the labor market. Research methods include linear regression analysis using Mincer-type models. In contrast to the previous studies, the variable reflecting probability of the profession computerization is added to the model. The authors present the first-time evidence for labor market digital polarization in Russia. Polarization is reflected in the simultaneous increase in the number of professions that are more likely to be computerized, as well as professions that are based on complex, abstract, non-routine tasks that cannot be fully computerized. The results of the study demonstrate a significant negative effect of the probability of profession computerization on earnings over the entire period. The discovered digital polarization indicates a significant gap in the middle-skilled professions which are not susceptible to computerization in the near future. Practical implications: This research results can be used to monitor professions under the threat of digital automation in the Russian labor market. The limitations: Authors use of estimates of the probability of the profession computerization, which was previously calculated for the developed labor market. In further research, it is necessary to assess the probability of the computerization of professions specifically for the Russian labor market.KeywordsDigitalizationLabor marketTransformationPolarizationProbability of computerizationWage differentialsRussia