Arnoldshain Seminar XV
“The EU and Latin America Facing Globalization”
September 4 – 6, 2017

Elsas, Alexander, Goethe University Frankfurt, and Caro Wondrak, Consequences of digitalization for the labor markets.
This paper is dealing with the developments originating from digitalization and the impact on work and therefore the labour markets. We lay out what the understanding of the term digitalization is and therefore explain with examples what next stages it triggers as well as predicting scenarios for the future of work. Digitization is the technical process of converting analog media into digital files and the first step to digitalization. Digitalization describes the change of business models, industries, or economies because of digital, networked, and media- break free processes based on digitization. The advantages of digital files (or streams) are the reduced amount of physical storage space and less bandwidth need for transmission as compressing technologies can be applied to them. This impacted also that data is much easier to swap and exchange. The real strength is converting those raw files into more meaningful files. A good example here is scanning of documents. The result from digitization is only a picture made of pixels (bitmap) with no other additional information, only storage and transmission are possible. By analysing such a raw file and identifying characters, converting the raw picture file into a text document allows editing the text compromised of characters from a defined character set. This process is known as Optical Character Recognition (OCR) and used for banking transactions for many decades. This concept can be generalized to identify objects like persons in the raw picture file. Google or Facebook have such technologies. It is the second step within digitization. Already the first step has the potential to change industries, just think of the photographic industry which has changed to a nearly 100% digital industry within the last 15 years. Looking at the history of digitalization those two steps can be traced back quite a long time, the big push in recent years came from the availability of mobile connected devices like smartphones. More precise the introduction of the iPhone in 2007 triggered this. So connectivity via the Internet and especially mobile connectivity are the third step to digitalization. Compared to the industrial revolutions which have occured in the last centuries (mechanization, steam power, electrification ...) the reach beyond the industrial or production sector into the everyday private life is the core difference between digitalization and the former revolutions. This has the potential to change industries and economies in the same form as the industrial revolution 200 years ago. Especially the consequences for the future of work and labour are within the focus of an economic view on digitalization. This paper therefore gives a comparative overview of different studies addressing this topic. There is no general consensus in the economic community at the moment and especially the political measures to be taken are controversly discussed. These aspects will be discussed in the second part of the paper.