Routine Biased Technological Change, Principal-Agent Model and Non-Standard Employment: Evidence from PIAAC

This study applied the principal-agent model to interpret the impact of routine biased technological change (RBTC) on the structure of employment relations. RBTC increases the proportion of routine tasks in work activities, due to their fixed procedural nature, routine tasks reduce uncertainties in the principal-agent problem. Employers, being able to predict work contingencies and to verify employee efforts, find the benefit of offering standard labor contracts is reduced, thereby increasing the ratio of non-standard employment. This study applied logistic regression based on the Program for the International Assessment of Adult Competencies (PIAAC) survey data to verify this framework. The results indicated that with each standard deviation increased in routine task intensity, the odds ratio of non-standard employment increased by 13.6%. This effect was heterogeneous in various institutional contexts. This study expends the toolkit for analyzing employment relations problems, and extends the scope of RBTC to employment relations.