Technological progress has the potential to cause significant disruption in labor markets. This report examines the impact of computers, robots, AI, and improved ICT at work on labor markets in CADR. Advanced economies offer a model for how the future of work will look in Central America and the Dominican Republic (CADR), but important differences in development stages mean that the labor market impacts of technological progress are distinct now and are likely to continue to be in the near future. The report focuses on these technologies as the most likely to have shaped labor markets in the region in the recent past and the most likely to shape them in the near future. The report first examines how technological progress within the region is shaping what workers do and how they do it. The report goes beyond the analysis of susceptibility to automation to dissect the factors underlying recent labor market transformations and undercover the extent to which technological change has played a role in these transformations. The report also examines how technological progress outside of the region is shaping labor markets within it by investigating how robot adoption in the United States is affecting the demand for CADR workers in CADR countries and for CADR workers in the United States.
Authors
- Citation
- “ Moroz, Harry ; Viollaz, Mariana . 2024 . The Future of Work in Central America and the Dominican Republic . © Washington, DC: World Bank . http://hdl.handle.net/10986/42043 License: CC BY-NC 3.0 IGO . ”
- Collection(s)
- General Economy, Macroeconomics, and Growth Study
- Identifier externaldocumentum
- 34314166
- Identifier internaldocumentum
- 34314166
- Pages
- 129
- Published in
- United States of America
- Report
- 189900
- Rights
- CC BY-NC 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by-nc/3.0/igo
- UNIT
- Social Protection & Labor LCR (HLCSP)
- URI
- https://hdl.handle.net/10986/42043
- date disclosure
- 2024-08-13
- region geographical
- Caribbean , Central America
- theme
- Inclusive Growth,Job Creation,Gender,Human Development and Gender,Data Development and Capacity Building,ICT,Economic Policy,Skills Development,ICT Solutions,Economic Growth and Planning,Private Sector Development,Labor Market Policy and Programs,Public Sector Management,Job Quality,Jobs,Data production, accessibility and use,Labor Market Institutions,Migration, Remittances and Diaspora Engagement
Files
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