Tech­nol­ogy, pros­per­ity and in­equal­ity

The Jakarta Post - - OPINION - Gindo Tam­pub­olon and Maria Fa­jarini Gindo Tam­pub­olon is a fel­low at the Univer­sity of Manch­ester. Maria Fa­jarini is di­rec­tor of Ev­i­dence and An­a­lyt­ics, the United King­dom.

Dig­i­tal tech­nolo­gies are ubiq­ui­tous and dig­i­tal div­i­dends are promised ev­ery­where. Up to 20 per­cent of global eco­nomic growth has been a re­ward for in­vest­ment in dig­i­tal tech­nolo­gies in the past two decades, ac­cord­ing to last year’s World De­vel­op­ment Re­port from the World Bank.

Th­ese ben­e­fits are not limited to coun­tries alone, as in­di­vid­u­als have also gained. In the UK, our own re­search on Pub­lic Li­brary of Science One (plosone.org) showed that peo­ple aged 50 and over are ben­e­fit­ing from on­line so­cial con­nec­tions in help­ing to main­tain their cog­ni­tive func­tion. But what about in In­done­sia? And how fair have the dig­i­tal div­i­dends been shared, say among the sexes?

Ev­i­dence from other de­vel­op­ing coun­tries is en­cour­ag­ing. The in­tro­duc­tion of cel­lu­lar phones has led to a dra­matic nar­row­ing of price dis­per­sion and waste re­duc­tion in coastal fish mar­kets in South In­dia.

Across the globe in Peru, work­ers gained in higher wages from dig­i­tal tech­nolo­gies. Smart­phones have been es­sen­tial in erod­ing in­for­ma­tion asym­me­try that holds dis­ad­van­taged groups from reap­ing the dig­i­tal div­i­dends.

But re­cent ev­i­dence from In­done­sia sounds a warn­ing. Our own re­search in the Telecom­mu­ni­ca­tion Pol­icy jour­nal showed that ac­cess to the in­ter­net in In­done­sia re­mains un­equal. In fact, this in­equal­ity has deep­ened re­cently along per­sis­tent so­cial cleav­ages, such as gen­der in­equal­ity.

Our lat­est re­search of 82,382 work­ing age (15 to 55 years) In­done­sians re­vealed the im­pact of such in­equal­i­ties on se­cur­ing bet­ter jobs and higher wages in In­done­sia.

Bet­ter jobs are found in the for­mal sec­tor, for in­stance, as a sci­en­tist, away from the in­for­mal sec­tor, such as a por­ridge stall­holder.

The for­mal sec­tor is widely known to be a more re­ward­ing part of the econ­omy and con­trib­ute more to pub­lic fi­nance through taxes and pen­sion con­tri­bu­tions. Thus by in­creas­ing the chance of se­cur­ing for­mal sec­tor jobs, dig­i­tal tech­nolo­gies en­able work­ers to be more pro­duc­tive and the gov­ern­ment to ad­min­is­ter tax more ef­fi­ciently, al­to­gether en­hanc­ing pros­per­ity.

We found, first, as a re­sult of smart­phone use, men have a higher prob­a­bil­ity of se­cur­ing for­mal jobs, but im­prove­ment is higher among women: 0.29 ver­sus 0.24. Th­ese dif­fer­en­tial ef­fects of tech­nol­ogy have rarely been noted: tech­nol­ogy nar­rows the gen­der di­vide, by 5 per­cent­age points in this in­stance.

Sec­ond, the ef­fects of smart­phone use on wages across the wages of women work­ers in the for­mal sec­tor are all pos­i­tive. More in­ter­est­ingly, among women there is a mono­tone pat­tern in th­ese pos­i­tive ef­fects. So at the low end, the users earned 54 per­cent higher wages, while around the mid­dle, users earned only 35 per­cent higher wages.

Be­cause of the mono­tone pat­tern, mo­bile tech­nol­ogy does not dis­perse their wages. In fact, among women, tech­nol­ogy en­hances wage par­ity.

How­ever this is not so among men. The ef­fects of smart­phone use on men’s wages are also pos­i­tive along the lines of wage dis­tri­bu­tion, but the pat­tern is dif­fer­ent. At the lower end, smart­phone users earned 18 per­cent higher wages; at the mid­dle, smart­phone use raised wages by 20 per­cent, a higher in­crease.

There­fore, mo­bile tech­nol­ogy dis­perses their wages.

Be­cause men’s wages have been higher than women’s and men also make up the larger chunk of the for­mal sec­tor, the end re­sult of th­ese pat­terns is a likely in­crease in wage in­equal­ity. Nev­er­the­less, the fact re­mains that smart­phone use nar­rowed the gen­der gap in the for­mal sec­tor and re­duced in­equal­ity con­sid­er­ably in women’s wage dis­tri­bu­tion.

Th­ese ef­fects of dig­i­tal tech­nolo­gies pose stark ques­tions for In­done­sia.

What op­tions are there to mit­i­gate the wage in­equal­ity ef­fect? The vi­able op­tion is to equip peo­ple in this race be­tween peo­ple and tech­nol­ogy by broad­en­ing the base for higher ed­u­ca­tion and rais­ing its qual­ity.

In­done­sia’s en­rol­ment rates in higher ed­u­ca­tion have been slow­ing down over the last two decades and re­main highly un­equal, with fam­i­lies at the bot­tom fifth of in­come dis­tri­bu­tion send­ing only 20 per­cent of chil­dren to col­lege.

This is wors­ened by the low qual­ity of ed­u­ca­tion in the last two decades. The lat­est ev­i­dence from Trends in Math­e­mat­ics and Science Study put 90 per­cent of In­done­sian youths in the bot­tom 5 per­cent of the world dis­tri­bu­tion of math­e­mat­ics and science grades.

Ed­u­ca­tion in In­done­sia, there­fore, ur­gently needs im­prove­ment to re­spond to this dy­nam­ics of dig­i­tal tech­nolo­gies. In par­tic­u­lar, giv­ing ex­tra sup­port to young girls to en­roll in science and math­e­mat­ics classes is ur­gently needed.

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