Connected and Employed: Empirical Evidence On The Internet of Things in a Panel of Countries

Abstract: The Internet of Things (IoT) is a network of interconnected devices and objects, able to communicate with each other, the physical world and the Internet. It has a wide range of applications, from automation to data collection, in a number of industries and sectors. However, the literature on its economic impacts is limited. This thesis aims at filling some of the gap by investigating whether a significant relationship between IoT usage and labor demand exists. To do this, I construct a panel of country-level data on the number of Internet of Things connections in 107 countries over the early years of IoT introduction (2010-2019). Applying two-way fixed effects and dynamic panel models, I find evidence of a positive and significant relationship between IoT connections per 100 inhabitants and employment in OECD countries, driven by a positive relationship within the services sector. Some evidence of a negative relationship between this IoT measure and industry employment was also found, in the full and the non-OECD samples. No evidence of a significant association between unemployment and IoT was found. The results are in line with the literature on technological change, and the idea that it creates winners and losers among workers. Nonetheless, any causal interpretation is beyond reach at this time.