The Future of Work in Central America and the Dominican Republic

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Table of Contents

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• Abbreviations and Acronyms 8
• Acknowledgements and Data Notes 10
• Executive Summary 11
• The Limited Reach of Technology in Central America and the Dominican Republic 11
• CADR’s Incomplete Transition to the Future of Work 13
• The Factors Behind CADR’s Incomplete Transition 15
• The Importance of Technological Change Abroad 17
• Facilitating Technological Progress That Benefits Workers 18
• Chapter 1 Jobs in Central America and the Dominican Republic 21
• Setting the stage: Labor Market Dynamics and Technological Progress 21
• Growth and Employment Dynamics 23
• Economic Growth 23
• Productivity 24
• Employment 25
• Labor Supply 27
• Labor Force Participation and Employment 27
• Job Quality 29
• Skills 30
• Migration 32
• Labor Demand 33
• Chapter 2 The Labor Market Impacts of Technological Progress 36
• Setting the Stage: The History of the Future of Work 36
• Technology’s Labor Market Impacts: Changes in What Workers Do and How They Do It 37
• Technology’s Labor Market Impacts: The Evidence from Advanced Economies 40
• Technology’s Labor Market Impacts: The View Outside of Advanced Economies 42
• Chapter 3 Technological Progress and Labor Market Transformation in CADR Countries 44
• Setting the Stage: Technological Progress and Its Employment Impacts 44
• Changes in Tasks 44
• Changes in Tasks: Computerization 44
• Changes in Tasks: Artificial Intelligence and Mobile Robotics 55
• Changes in Working Arrangements 58
• Changes in Working Arrangements: Remote Work 58
• Changes in Working Arrangements: Platform Work 62
• Chapter 4 Barriers to and Enablers of the Future of Work in CADR Countries 66
• Setting the Stage: Looking Beyond Technological Potential 66
• The Channels of Employment Change 67
• Employment Structure 68
• Supply of Skills 73
• Adoption and Diffusion of Technology 77
• Globalization 83
• Chapter 5 Policy Recommendations 88
• Setting the Stage: Facilitating Technological Progress from Which Workers Can Benefit 88
• Promote the Adoption and Diffusion of Technology by Building Firm Capabilities 90
• Strengthen Pathways for Skills Development and Deployment 95
• Deploy Labor Market Insight Tools 96
• Build Foundations-driven, Demand-oriented Education and Training Systems 97
• Design Digitally Enabled, Fit-for-purpose Intermediation Programs 103
• Adapt Social Protection and Labor Market Policies to New Forms of Work 105
• References 107
• Figure ES1: Lags in Technology Adoption in CADR Countries 12
• Figure ES2: Use of Computers and the Internet at Work, 2021 12
• Figure ES3: Classifying Tasks by Their Automatability 13
• Figure ES4: Routine and Nonroutine Task Intensity in CADR Versus the United States, 2021 13
• Figure ES5: Share of Jobs at High Risk of Automation, Original and Adjusted Measures, 2021 14
• Figure ES6: Changes in the Routine Intensity of Work, 2011–19 15
• Figure ES7: Online Gig Workers, 2022 15
• Figure ES8: Evolution of the Task Content of Migrants in the United States, 1970–2021 18
• Figure 1.1: GDP Per Capita, 2002–21 23
• Figure 1.2: GDP Growth, 2002–19 23
• Figure 1.3: Labor Productivity Across Sectors, 2019 24
• Figure 1.4: Labor Productivity Growth Across Sectors, 2002–19 25
• Figure 1.5: Employment Growth, 2002–19 25
• Figure 1.6: Change in Employment Share by Sector, 1960–2010 26
• Figure 1.7: Employment Share by Sector, 1991–2019 26
• Figure 1.8: Labor Force Participation Rate, 2021 27
• Figure 1.9: Female Labor Force Participation Rate, 2021 27
• Figure 1.10: Female-Male Gap in Labor Force Participation Rate, 2021 28
• Figure 1.11: Unemployment Rate, 2002–21 28
• Figure 1.12: Female-Male Gap in Unemployment Rate, 2002–21 29
• Figure 1.13: Young People in NEET Status, 2021 29
• Figure 1.14: Employment Share by Wage and Self-Employment, 2019 29
• Figure 1.15: Employment Share by Wage Employment, 2002–19 29
• Figure 1.16: Informality Rate, 2021 30
• Figure 1.17: Schooling and Learning-Adjusted Schooling, 2019 31
• Figure 1.18: Learning Poverty, 2019 31
• Figure 1.19: Employment Rate by Education, 2021 31
• Figure 1.20: Informality Rate by Education, 2021 31
• Figure 1.21: Employment Share by Skill Level, 2021 32
• Figure 1.22: Change in Employment Share by Skill Level, 2011-21 32
• Figure 1.23: Net Migration Rate, 2021 33
• Figure 1.24: Migrants from CADR countries, 1990–2020 33
• Figure 1.25: Share of CADR Outmigrants in the United States, 2020 33
• Figure 1.26: Remittance Inflows, 2022 33
• Figure 1.27: New Business Density, 2020 34
• Figure 1.28: Firms Choosing Inadequate Education as Biggest Obstacle, 2016 34
• Figure 2.1: Classifying Tasks by Their Automatability 38
• Figure 2.2: The Labor Market Impacts of Technological Change in CADR 43
• Figure 3.1: Change in Employment Share by Skill Level, circa 1980s to circa 2000s 45
• Figure 3.2: Changes in the Routine Intensity of Work, 2011–19 46
• Figure 3.3: RTI and Task Intensity of CADR Countries, 2021 47
• Figure 3.4: RTI by Economic Sector, 2021 47
• Figure 3.4: RTI by Economic Sector, 2021 (continued) 48
• Figure 3.5: RTI by Sociodemographic Characteristics, 2021 49
• Figure 3.6: Returns to Routine and Nonroutine Tasks, 2010s 49
• Figure 3.7: Three-Year migrants in the United States, 1970–2021 50
• Figure 3.8: Three-Year CADR Migrants in the United States, 1970–2021 50
• Figure 3.9: Employment of Three-Year Migrants in Manufacturing Jobs in the United States, 1970–2021 51
• Figure 3.10: Employment of Three-Year Migrants in Construction Jobs in the United States, 1970–2021 51
• Figure 3.11: Change in Employment Share by Skill Level of Three-Year Migrants and United States Nonmigrants in the United States, 1980–2021 52
• Figure 3.12: Evolution of the Task Content of Three-Year Migrants in the United States, 1970–2021 53
• Figure 3.13: Evolution of the Task Content of Three-Year CADR Migrants by Gender in the United States, 1970–2021 54
• Figure 3.14: Average Hourly Wage of Three-Year Migrants in the United States, 1980–2021 55
• Figure 3.15: Susceptibility of the Workforce to Automation, 2021 55
• Figure 3.16: Probability of Automation by Sociodemographic Characteristics, 2021 56
• Figure 3.17: Share of Jobs at High Risk of Automation, Original and Adjusted Measures, 2021 57
• Figure 3.18: Average Probability of Automation, 2021 58
• Figure 3.19: Share of Workers with at Least 10 and 50 Percent of Tasks Exposed to GPTs, 2021 58
• Figure 3.20: Share of Workers in Jobs with High Amenability to Working from Home, 2021 59
• Figure 3.21: Share of Wage Workers Working from Home Prior to the Pandemic, 2019 60
• Figure 3.22: Share of Self-Employed Working from Home Prior to the Pandemic, 2019 60
• Figure 3.23: Share of Workers Working from Home During the Pandemic, 2021 61
• Figure 3.24: Share of Workers Working from Home During the Pandemic, 2020 61
• Figure 3.25: Global Demand for Online Gig Work, 2016–23 63
• Figure 3.26: Online Gig Workers, 2022 64
• Figure 3.27: Characteristics of Workana Freelancers, 2022 65
• Figure 4.1: Factors Contributing to Cross-Country Variation in Routine Task Intensity, 2010–2021 68
• Figure 4.2: Deindustrialization in CADR and High-Income Countries, 1991–2021 70
• Figure 4.3: Change in the Industrial Share of Employment, 1991–2019 70
• Figure 4.4: Digitally Deliverable Services Exports, 2005–21 71
• Figure 4.5: Use of Digital Platforms, 2020 72
• Figure 4.6: SME Engagement with Digital Tools, 2020 and 2022 73
• Figure 4.7: Education of the Employed Population in CADR Countries, 2000–21 74
• Figure 4.8: Share of Students Meeting Minimum Proficiency in Reading and Math, 2022 75
• Figure B4.1.1: Penetration of Technology and Disruptive Technology Skills, 2022 76
• Figure 4.9: The Digital Adoption Index, 2016 77
• Figure 4.10: The Frontier Technology Readiness Index: ICT, 2022 77
• Figure 4.11: The Contribution of ICT and Non-ICT Assets to Economic Growth, 2000s–10s 78
• Figure 4.12: Lags in Technology Adoption in CADR Countries 79
• Figure 4.13: Diffusion of the Internet and Cell Phones, 2021 79
• Figure 4.14: Use of Computers and the Internet at Work, 2021 80
• Figure 4.15: Use of Digital Platforms, 2021 80
• Figure 4.16: Share of Jobs at High Risk of Automation by Sector, 2021 81
• Figure 4.17: Imports of ICT Goods and ICT Services as Share of Total Trade, 2021 82
• Figure 4.18: Prices of ICT Service Baskets, 2022 83
• Figure 4.19: Net Inflows of Foreign Direct Investment, 1970–2022 84
• Figure 4.20: Share of Output in GVCs by Sector, 2021 84
• Figure 4.21: Relationship Between Routine Task Intensity Index and GVCs, 2010–2021 85
• Figure B5.2.1: Share of Green Jobs in CADR Countries Overall and by Gender, 2021 93
• Figure B5.2.2: Share of green jobs in CADR countries by sector, 2021 93
• Figure B5.2.3: Green Talent in Costa Rica and Comparator Countries, 2023 94
• Figure B5.5.1: Use of Computers and the Internet at Work by Gender, 2021 101
• Figure B5.5.2: Female Enrolment in Tertiary Programs and in ICT- and Engineering-Related Tertiary Degree Programs, 2021 102
• Table ES1: Policies to Facilitate Technological Change and Mitigate the Negative Effects of Resulting Disruptions 20
• Table 1.1: Summary of the Main Labor Market Supply and Demand Issues in CADR 22
• Table 1.2: The Biggest Obstacles Facing Firms 34
• Table 3.1: Advantages and Disadvantages of Platform Work for Workers and Firms 62
• Table 3.2: Primary Location-Based Platforms in CADR Countries 63
• Table 3.3: Most Common Type of Online Gig Tasks in CADR Countries, 2017–23 64
• Table 4.1: Examples of Digital Interventions Targeted to Smallholder Farmers in CADR 69
• Table 4.1: Imports of Industrial Robots, 2021 80
• Table 5.1: Policies to Facilitate Technological Change and Mitigate the Negative Effects of Resulting Disruptions 89
• Table 5.2: Drivers of Technology Adoption Among Firms 90
• Table 5.3: Main Challenges Cited by SMEs When Using or Trying to Adopt Digital Platforms, 2022 95
• Table 5.4: Tools for Identifying In-Demand Skills 97
• Box 2.1: Competitive Markets and Technology Adoption 37
• Box 2.2: Spatial Differences in the Labor Market Impacts of Technological Progress 41
• Box 4.1: The Availability of Technology Skills in Costa Rica and Panama 76
• Box 5.1: Promoting Competition, Rightsizing Regulations, and Expanding Access to Finance to Facilitate Technology Adoption 91
• Box 5.2: Green Jobs in CADR 92
• Box 5.3: The Labor Market Benefits of Early Childhood Education 98
• Box 5.4: Incorporating Digital Skills Training into Technical and Vocational Education and Training 99
• Box 5.5: The Complex Interaction of Technology, Labor Markets, and Gender 100
• Box 5.6: Using SkillCraft to Connect Disadvantaged Young People to the Labor Market 104
• Box 5.7: Public Gig Work Platforms 105