Incidence of the Digital Economy and Frictional Unemployment : International Evidence
This paper is the first to quantify the relationship between the incidence of the digital economy and long-term frictional unemployment across countries. The resulting evidence indicates that there is a robust, negative partial correlation between...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/695951583182737286/Incidence-of-the-Digital-Economy-and-Frictional-Unemployment-International-Evidence http://hdl.handle.net/10986/33413 |
| Summary: | This paper is the first to quantify the
relationship between the incidence of the digital economy
and long-term frictional unemployment across countries. The
resulting evidence indicates that there is a robust,
negative partial correlation between national unemployment
rates and the incidence of the digital economy, proxied by
the share of the adult population that reports using the
internet to pay bills. Further, the absolute values of
ordinary least squares estimates of the partial correlation
suggest that it might be higher for developing economies
than high-income economies. Controlling for the incidence of
informal employment appears to be key for removing a
positive omitted- variable bias in the estimate of the
partial correlation between unemployment and the digital
economy, which is due to the existence of a negative
bivariate correlation between unemployment and informality
on the one hand, and a negative bivariate correlation
between informality and the incidence of digital payment on
the other hand. The results from instrumental variable
estimations suggest that the partial correlation between
unemployment and digital payments is negative, with the
absolute value of the estimates being larger than the
absolute value of the ordinary least squares estimates. |
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