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Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure

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Author Info
Borghans, Lex () (Maastricht University)
ter Weel, Bas () (CPB Netherlands Bureau for Economic Policy Analysis)

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Abstract

We review the empirical literature about the implications of the computerization of the labor market to see whether it can explain observed computer adoption patterns and (long-term) changes in the wage structure. Evidence from empirical micro studies turns out to be inconsistent with macro studies that are based on CES production functions. We propose a micro foundation for the CES production function that allows for changes in the underlying structure. We adapt the macro model by incorporating computer skills, complementary skills and fixed costs for computer technology usage suggested by the micro literature. It turns out that fixed costs for computer technology usage explain different patterns of computer adoption and diffusion between several types of workers and countries; it also provides very plausible patterns of the timing of wage inequality and developments over time.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3792.

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Date of creation: Oct 2008
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Publication status: forthcoming in: Journal of Income Distribution
Handle: RePEc:iza:izadps:dp3792

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Related research
Keywords: computer technology; wage level of structure; technology diffusion;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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References listed on IDEAS
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  30. Borghans, Lex & ter Weel, Bas, 2004. "What happens when agent T gets a computer?: The labor market impact of cost efficient computer adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 137-151, June. [Downloadable!] (restricted)
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  31. Borghans,Lex & Weel,Bas,ter, 2003. "The Diffusion of Computers and the Distribution of Wages," Research Memoranda 003, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
    Other versions:
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