in the Number of Online Freelancers

largest such platform, had over 12 million registered freelancers from over 100 countries in 2017 and processes more than US$1 billion worth of work annually.

Based on data from five such platforms that represent at least 60 percent of the global market for English-language online outsourcing, the Oxford Internet Institute’s iLabour research project finds that software development services is the top category, with the estimated number of online gig workers increasing fourfold, from 10 million in 2017 to 40 million in 2020. The next biggest category, creative and multimedia services, increased from 10 million in 2017 to 30 million in 2020. Among global innovator services, professional services such as accounting, business consulting, and legal advice grew little over this period, representing less than 5 percent of the overall online gig economy (figure 3.2).2

Low-Skill Services and Digital Platforms

It is not that digital platforms are not relevant in low-skill services subsectors. In fact, they have become integral to many low-skill tradable services. Travel-related transportation and accommodation services are especially reliant on the customer convenience of online platforms. Booking.com offers 29 million accommodation listings in

FIGURE 3.2 Software Development Services Have Experienced the Largest Increase in the Number of Online Freelancers

Workers in platform-based online freelancing, by occupational type, June 2017–October 2020

Workers (millions) 50

45

40

35

30

25

20

15

10

5

0

2017 2018 2019 2020

Clerical and data entry Professional services Software development and technology Creative and multimedia Sales and marketing support Writing and translation

Source: Online Labor Index Worker Supplement of the iLabour Project, Oxford Internet Institute, University of Oxford, https://ilabour.oii .ox.ac.uk/online-labour-index/.

154,000 destinations worldwide and operates in 190 countries. Similarly, Tripadvisor reports 8.4 accommodation listings in 156,000 destinations spread across 49 markets (Lopez-Cordova 2020). Tourism service providers’ use of these digital platforms is growing, both across traditional (hotels) and nontraditional (“bed and breakfast”) accommodation establishments in LMICs.

At the same time, foreign travelers increasingly rely on digital platforms to make their travel plans. In 2014, an estimated 59 percent of European Union (EU) residents traveling internationally relied on digital tools to book accommodation, and 67 percent used them to book flights (Lopez-Cordova 2020). This increased use of digital tools by travelers and firms providing accommodation and transportation services reflects the reduced importance of proximity in gathering information on travel costs (airfares, hotel room rates, and so on) and facilitating market transactions.3

Digital platforms have had a similar, albeit smaller, impact on low-skill domestic services. In 2014, the share of online retailing in overall retail trade services was only 6.4 percent in the United States (Hortaçsu and Syverson 2015) and averaged only 4 percent across LMICs, but this conceals differences across industries. For example, the share of online retail for apparel, footwear, electronics, and appliances—durable goods often sold online—increased from close to zero in 2009 to 31 percent in 2014 in China and from 5 percent to 23 percent in the United States (Bronnenberg and Ellickson 2015). There are further signs of change. The share of online retail in overall retail sales was 14 percent in the last quarter of 2020 in the United States, and this increase was attributable, at least in part, to the COVID-19 pandemic.4

Among low-skill domestic services, digital platforms such as TaskRabbit and Care.com that match suppliers with buyers are also increasingly applicable to a range of personal household services, including home repair, plumbing, and cleaning. In Ecuador, Kunpa connects customers with verified providers for household services such as plumbing, gardening, hairdressing, and the like and features a rating system to guide consumers’ choices.5 BabaJob, established in 2007, is one of India’s leading job-matching websites and also matches workers to potential employers in low-skillintensive informal services. In 2015, for example, BabaJob’s total job listings for sales and service workers exceeded the total for managers and professionals (Nomura et al. 2017).

Yet, beyond working as “online tools” to match market demand and supply, digital platforms do not enable the remote provision of these low-skill services whose delivery remains tied to the physical proximity between producers and consumers.

Increased Role of Automation

The Diffusion of ICT

Unlike for manufactured goods, digital technologies are likely to have a big downward effect on the cost of trading services but an insignificant impact on the laborcost shares in services (Baldwin and Forslid 2020). This is consistent with a well-established framework that estimates which jobs are at risk of automation based on which tasks computers can execute reliably (Autor, Levy, and Murnane 2003). These tasks are procedural, rule-based activities that primarily involve the organization, storage, retrieval, and manipulation of information that can be entirely codified as a series of precise instructions to be executed by a computer. A large body of evidence, based on data from the United States and other high-income countries, shows that the computerization of such “routine” (or “codifiable”) tasks resulted in job polarization—meaning that high- and low-skill jobs have grown at the expense of many more-automatable middle-skill jobs such as bookkeeping, clerical work, and repetitive production (Autor and Dorn 2013; Autor, Katz, and Kearney 2006, 2008; Goos and Manning 2003).

At both ends of the skill spectrum, services tasks have been more challenging to automate. Among these are cognitive tasks, characteristic of many professional, technical, and managerial services that employ highly skilled workers and emphasize problem-solving capabilities, intuition, creativity, and persuasion. Also difficult to automate are the manual tasks, characteristic of health care, food preparation and serving jobs, cleaning work, and numerous jobs in the personal services sector that are not skill intensive but emphasize situational adaptability, visual and language recognition, and in-person interactions (Autor, Levy, and Murnane 2003).

Yet the prevalence of routine tasks, especially across low-skill services subsectors, means that more than two-thirds of jobs in the accommodation and food services and retail trade subsectors, for instance, are suitable for greater computerization.6 Furthermore, recent evidence is indicative of more widespread ICT adoption across services subsectors, although this is more uneven in LMICs.7

Catch-Up in ICT Use among Low-Skill Services in Higher-Income Countries The average share of ICT and finance firms with a broadband connection across Organisation for Economic Co-operation and Development (OECD) countries already exceeded 95 percent in 2010. Meanwhile, the average share of retail firms with a broadband connection increased from about 84 percent in 2010 to about 95 percent in 2017, and the corresponding share in accommodation and food services rose from 76 percent to 94 percent over the same period (figure 3.3, panel a).

Similarly, the share of ICT services and finance firms whose employees regularly use a computer in their work already averaged more than 90 percent in 2010. The same