Digitalization: Jobs, firms and households

The project examines the digitalization of the Danish economy along three dimensions. First, it evaluates the extent and consequences of the “digital divide” between workers who possess digital skills and those who do not and between firms who invest in digital skills and those who do not. Second, the gendered consequences of digitalization in the workplace and in household time allocation are considered. Finally, the drivers of digitalization in public and private organizations are explored.

The research project "Digitalization: Jobs, firms and households" is funded by the The Rockwool Foundation.

The project consists of six sub-projects grouped into three broad themes concentrating on digitalization, with a particular focus on the labor market.

The first theme addresses the “digital divide” between digitally skilled and unskilled workers and the consequences of digitalization for firms and public institutions. In order to study digitalization, measures of digitalization must be defined and constructed. Our starting point is that the adoption of digital technologies can be identified from the footprints it leaves at establishments that hire workers specializing in digital activities. We can determine the demand for digital skills through a machine reading of job postings data from, which include the near universe of online job vacancies in Denmark starting in 2007. Using these measures, we will then generally ask: how has Denmark adopted and used digital technologies in the past decade? First, we will describe the demand for digital skills in the Danish labor market, both in the private and public sectors. Next, we will investigate how this demand – as captured by the near universe of job postings - evolved in conjunction with other skills sets (e.g. social and cognitive) over the past decade, and whether specific industries and occupations are experiencing relatively larger rates of expansions in digital skill usage. Finally, we will explore the relationship between digital skill usage and the production of digital technologies and other firm level outcomes. We will provide a comprehensive picture of investment in digital technologies and its impact among Danish workers, firms and public entities over the last decade, using a unique combination of job postings, individual-level employment profiles and firm-level measures (RQ1).

We will then analyze the consequences of digitalization for workers: Does digitalization destroy job prospects for workers who do not possess the adequate skills, or does it complement human productivity? If so, what skills are required to complement digitalization, e.g., cognitive or social skills? We investigate whether the eight digital clusters defined in RQ1 are associated with changes in the non-digital skill content of new jobs. Our approach will allow us to determine which skills are declining and which new skills are emerging as firms digitalize. Higher productivity from digitalization tends to increase labor demand, but because some workers will be displaced, digitalization can lead to an overall decline in employment and wages. Our approach will allow us to estimate the wage and employment effects of digitalization (RQ2).
The increase in demand for digitally skilled labor is challenging education systems and labor markets, as the supply of these workers is not sufficient to meet increasing demand. First- and second-generation immigrants represent a potential unexploited source of such skills. Since digital skills are easier to codify, compared to e.g. social skills, it may also be easier for immigrant workers to document their digital skills, obtain employment, demand remuneration for those skills and thus become better integrated in the labor market. We will investigate this possibility by estimating the immigrant-native wage differential as a function of the level of digitalization, how this differential affects immigrants’ choices to acquire digital skills, and how digital skills improve employment and assimilation in the Danish labor market (RQ3).

The second theme addresses the gendered consequences of digitalization in the workplace and in household time allocation. The recent COVID-19 pandemic has created a disruption to everyday life that is unprecedented within the last 50 years at least. Overnight, individuals and families have had to improvise ways of managing childcare, providing at-home education and procuring homemade meals, often while trying to simultaneously continue working for pay. We will examine how digitalization, flexibility and remote work experience interact with
gender in generating individual and household changes in time allocation, ability to work from home, household tasks allocation, and in the management of children’s education during full and partial lockdown periods. We will then try to understand the longer lasting effects of the pandemic shocks on individuals and households – are these change transitory or permanent? Finally, we will investigate the consequences of these changes (i.e. future labor market outcomes, academic and health consequences for children, divorce rates, etc.) (RQ4).

The third theme of the project explores the drivers of digital adoption in public and private organizations. We will study whether firms that have invested in IT technologies prior to an economic shock perform better through the crisis compared to 1) firms that have not made such investments, and 2) firms that make digital investments after the onset of a crisis. Using survey data matched to DST’s registry we will study the complementarity between investments in IT technologies and organizational changes, as a potential driver of firm performance through recessions (RQ5).

The leaders of public and private organizations (CEOs, Boards, top managers) may exert a direct influence on the rate of digital technology adoption and whether that adoption takes root. On the other hand, organizations, independently of top leadership, may possess a culture that fosters rapid digital adoption and enables successful implementation of that adoption. This project seeks to understand the degree to which leadership in public and private organizations affects the trajectory of digital skill demand, and how this compares to the importance of the organizational culture in which they work (RQ6).
Finally, the private and public sector quickly needed to adapt to a much higher reliance on remote work during the pandemic. Did this shock increase the adoption rate of digital skill utilization? RQ1 and RQ4 will also investigate this possibility.

The page was last edited by: Department of Economics // 07/11/2023