Digital Transformation and the Public Sector Workforce: An exploration and research agenda

Abstract

The research on the effects of technological change on labor has generally overlooked the public sector. Although the public sector is considered a large adopter of ICT technologies and commands a massive workforce, the empirical research on the issue is scant. Several factors make this line of inquiry complex: the very nature of the public sector as a non-market, the absence of prices for outputs, data limitations and measurement challenges. Furthermore, public administrations are not homogeneous in scale nor scope, they respond to intricate institutional factors, path dependencies, socio-political arrangements, plus having economic and fiscal constraints. This project aims to contribute to further understand the relatively unexplored relationship between digitalization and public sector employment. The paper relies on a dataset built by selecting and merging data from the World Bank's Worldwide Bureaucracy Indicators (WWBI) and the United Nations' e-Government Development Index (EGDI) for 16 European countries between 2008 and 2018. Public employment is explored in terms of both its aggregate level (public sector employment as share of paid employment) and of its functional composition (professionals and technicians). Descriptive evidence highlights substantial heterogeneities across countries and over time. Digitalization is found to be positively correlated with the overall share of public sector employment, but this correlation appears to be driven by professionals employed in it. A negative correlation is instead found for the technicians' occupational level. The opposite sign estimated for the two components of public employment might reflect a significant job polarization in the public sector workforce. Important caveats and limitations should be mentioned, the institutional configuration, path dependencies, managerial traditions and other relevant factors have not been accounted for in the model and may require alternative methods for inquiry.