Association for Public Policy Analysis & Management

The effect of technological innovations on labor market outcomes has been widely studied. According to a recent World Bank report, 1.8 billion jobs in developing countries are at risk of being automated. However, little is known about how technological innovations will impact Central Asia. I hypothesize that, in the Central Asian economies of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, a firm’s level of computerization is negatively correlated with its workforce size. Given a high proportion of Central Asian workers fill manual, low-skilled positions, a substantial number of these positions should, in theory, be susceptible to technology-induced labor substitution. To test my hypothesis, I use the World Bank’s Business Environment and Enterprise Performance Survey (BEEPS) to assess the relationship between technological advancement, as measured by changes in a firm’s personal computer (PC) adoption, and changes in its workforce size. My analysis finds no relationship between a firm’s computer use and its workforce size. This finding withstands a battery of robustness checks. The World Bank asserts that the rapid growth and diffusion of digital technologies, along with the growing importance of the digital economy, necessitate a discussion among policymakers and policy researchers about the consequences of these new technologies. A better regional understanding of the impact of technology on labor could help to guide assessments of policy options to maximize the benefits, and minimize the adverse impacts, of new technologies.