This project aims at analysing the relationship between digitalization, earnings inequality, political preferences and the welfare state following three intertwined strands of research. First, we will explore the relationship between digitalization, employment and wages relying on novel techniques to capture the degree of jobs' digitalization. Second, we will test whether the risk of technological unemployment has an impact on citizens' redistributive preferences. Third, we will assess the possible policy challenges for welfare states and pension systems in the new era of digitalization and automation.
In the first strand, we will explore the link between the digitalization of productive processes, the level of routineness of job tasks and changes in employment and earnings. In line with the recent literature, we will rely on two digitalization indexes: a digital use index and a digital tasks index. The analysis is carried out at the EU27 level thus providing cross-country comparisons, also devoting a specific focus to the case of Italy by using administrative data.
In the second strand, making use of the European Social Survey, we will test whether occupational risks related to routine-biased technological change are associated with different preferences for redistribution and for the type of income support devoted to the unemployed and the poor, e.g. a minimum income or an universal basic income.
In the third strand, we will propose an analytical grid consistent with a forward-looking perspective in order to analyse challenges for different types of welfare and pension systems associated with various scenarios about the effects on employment and income distribution engendered by digitalisation and automation. According to this grid, we will then assess which types of welfare and pension systems are better able to cope with the challenges due to technological progress, also proposing policy suggestions according to the type of scenario which might occur.
This research project will contribute to the existing literature in a number of ways.
First, we will provide novel and sound empirical evidence regarding the link between digitalization, employment and wages for EU-27 countries and, in more detail, for the case of Italy. In line with the more recent literature in this field, we will account for occupations and sectors' digitalization considering both the use of digital tools as well as the realization of digital tasks. From an empirical point of view, we will rely on two main indices (Cirillo et al. 2019): a digital use index, measuring the use computers and the use of e-mail; a digital tasks index capturing the relevance of selected set of digital tasks such as software programming or database administration. In addition, the level of routineness will be measured using an index composed of the task-related dimensions considered by Autor et al. (2003) and by other relevant contributions following this seminal work. As concerns the case of Italy, we will provide new evidence on the link between individuals' earnings and employability - assessed in a multiyear perspective - and both the technological pattern followed by the industry where they work and the type of task performed in their job, The empirical evidence is expected to contribute to the ongoing Europe-wide policy debate regarding the appropriate policy strategy to minimize the socio-economic risks characterizing the ongoing digital transition.
Second, we will add to the flourishing literature focusing on the impact that digitalization (and, more broadly, technology-related labor market risks) can have on socio-political preferences. More precisely, we aim at contributing to the recent debate (Kurer and Palier, 2019) concerning the impact that technology-related labour market risks may have on preferences for redistributive and welfare policies. With respect to technology-related risks, we will account for both objective and subjective risks (i.e. perceived) assessing also the relationship between the two. Moreover, we explore both generic preferences for fiscal redistribution as well as citizens' attitudes towards specific income support measures as an Universal Basic Income (UBI) or a Generalized Minimum Income scheme (GMI). In this way, the evidence provided by the project might directly contribute to the ongoing policy-debate concerning the role of such policies vis-a-vis technology driven socio-economic risks.
Third, we will contribute to the literature by providing a pioneering assessment on the consequences that future patterns of technological progress might have on the design of welfare and pension schemes. Actually, expected patterns of technological progress - characterised by a possible strengthening of the digitalisation and automation processes and an increase in the number of platform workers - might challenge the structure of current welfare and pension systems in many EU countries, jeopardising both their fiscal sustainability and benefits adequacy for many workers. The literature on welfare and pension systems has extensively focused on risks related to ageing population and on how to introduce tools suited to 'make contribution pay' thus incentivising labour supply while, to the best of our knowledge, few attention has been paid on how to organise welfare and pension systems if labour market trends would dramatically change because of the effects of the digitalisation process. This strand of the project will have a comparative perspective, since implications of digitalisation on labour market and inequality trends and, mostly, the overview of the pros and cons of the various characteristics of the welfare and pension systems will be carried out focusing on all EU-28 countries, even if a specific focus, also as concerns policy implications, will be devoted to the case of Italy. The objectives of the research are then: i) on a theoretical side, an extensive assessment of welfare and pension systems characteristics and their capacity to deal with different risk sources and, specifically, with those related to possible effects of the technological progress; ii) review the features of welfare and pension systems of EU countries to highlight which clusters of these systems are better suited to cope with risks related to increasing functional and personal inequality driven by digitalisation; iii) propose policy suggestions about how to redefine the architecture of welfare and pension systems to deal with various risks that might hit the socio-economic system.