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Interindustry wage differentials, technology adoption, and job polarization

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  • Shim, Myungkyu
  • Yang, Hee-Seung

Abstract

Based on observations that high-wage industries in 1980 experienced more evident job polarization between 1980 and 2009, we hypothesize that the persistent structure of interindustry wage differentials leads to heterogeneity in job polarization across industries; as the relative price of ICT capital declines, firms respond to exogenous wage differentials by replacing routine workers with capital. Our empirical analysis shows that, during the last three decades, the annualized growth rate of ICT capital per worker increased by 0.34 percent and that of routine employment decreased by 0.41 percent in the U.S. industries that paid 10 percent higher wages in 1980.

Suggested Citation

  • Shim, Myungkyu & Yang, Hee-Seung, 2018. "Interindustry wage differentials, technology adoption, and job polarization," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 141-160.
    • Handle: RePEc:eee:jeborg:v:146:y:2018:i:c:p:141-160
    DOI: 10.1016/j.jebo.2017.11.014
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    Cited by:

    1. Youjin Hahn & Myungkyu Shim & Hee-Seung Yang, 2021. "Industry Variations in Health Plans and Dynamic Employment Substitution," Journal of Labor Research, Springer, vol. 42(3), pages 449-467, December.
    2. Valerie A. Ramey, 2018. "Comment on "The Transformation of Manufacturing and the Decline in US Employment"," NBER Chapters, in: NBER Macroeconomics Annual 2018, volume 33, pages 380-388, National Bureau of Economic Research, Inc.
    3. Ramey, Valerie A, 2019. "Comment," University of California at San Diego, Economics Working Paper Series qt0sf7011r, Department of Economics, UC San Diego.
    4. Da Silva, António Dias & Laws, Athene & Petroulakis, Filippos, 2019. "Hours of work polarisation?," Working Paper Series 2324, European Central Bank.
    5. Antonio Martins-Neto & Nanditha Mathew & Pierre Mohnen & Tania Treibich, 2021. "Is There Job Polarization in Developing Economies? A Review and Outlook," CESifo Working Paper Series 9444, CESifo.

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    More about this item

    Keywords

    Job polarization; Interindustry wage differentials; Endogenous technology adoption;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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