In a previous article, I hypothesized that new digital platforms and remote work could have a very profound impact on the labor market. In particular, I pointed out that the introduction of companies like Uber, Didi, Rappi or Amazon, together with remote work, could lead to a reduction in structural unemployment in modern economies. Now I will try to explain the logic behind this hypothesis in a little more detail.
In particular, two key questions need to be answered to see whether it makes sense to propose something like this: Are the impacts of new platforms or remote work on the labor market large enough to affect the natural unemployment rate? What channel or direction would the presence of new platforms or types of remote work change the labor market? Let’s go by parts.
The volume and impact of new businesses and new types of work is no less. In the United States alone, Uber reported that in 2019 there were already a million drivers working for them (or with them, to use their own language that pretends their employees are actually their partners). This represents more than half a percentage point of the total economically active population of the United States. If we add to this the number of drivers or workers on other similar platforms (Lyft, Cornershop, Amazon, etc.), we would see that the participation of these types of jobs in the labor market could well fluctuate between 1% and 2%. of all workers in the United States. An impact of this magnitude could undoubtedly alter the natural unemployment rate, which until recently was estimated at 4 to 5% in the United States. For other countries there are no official figures or estimates, but if you take to the streets in certain urban areas of Mexico you can see that the number of workers in companies like Uber Eats, Didi or Rappi has increased significantly since in recent years . last years.
When it comes to remote work, there is much disagreement about its extent. Recent research based on a nationwide survey found that about half of all workers in the United States work remotely at least one day per week. On the other hand, a Pew Research Center survey concludes that 35% of people in the United States who have jobs that can be done remotely work remotely full-time. It should be noted that this percentage was only 7% before the pandemic.
In any case, the impact of new forms of work and new platforms is very far-reaching, at least in the case of the United States. Obviously, not all of these jobs are new. In fact, many of them have only replaced others (e.g. traditional taxi drivers), but in fact many new jobs have also emerged that only existed on a limited basis before the pandemic: grocery deliveries or online shopping, for example. Example.
So why might these new conditions or types of work change the labor market? I see three basic reasons. First, the flexibility they offer workers. With platforms, employees can choose when and at what time they want to work. They also decide the total time they devote to this activity: it can be full-time or just a few hours a week, or it can even be a supplement to another job.
Second, these jobs do not require very specific skills or training. This means that people without previous professional experience or those who left the labor market many years ago can enter or re-enter a job without major complications. The same thing happens in the education sector. In general, this does not represent a restriction on access to this type of work. Therefore, people who have worked in a certain sector of the economy can quickly find work in another sector. This reduces so-called frictional unemployment. We saw this clearly during the pandemic, when many construction workers quickly became food delivery workers.
Third, the entry costs for these jobs are relatively low since all you have is a means of transportation and a smartphone or computer. For example, a used car in the US could be enough to become an app-based service driver. This could even explain the rapid rise in prices of these cars in the US in recent years. In Latin American countries, purchasing a car, even a used one, is more complicated and expensive. But in these countries, many young or unemployed people have relatively easy access to a motorcycle or bicycle and can work as food deliverers for companies like Uber Eats or Rappi. The other big price, that of smartphones, has come down significantly due to technological advancements.
In short, technological changes, the so-called Uberization of work, remote work and changes in our mobility and consumption patterns – all of this has led to an important shift in the labor market that could have led to a reduction in natural resources or structural unemployment rates in modern economies . This has very important economic and social implications that need to be analyzed and discussed.
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