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What Happens When Agent T Gets a Computer? The Labor Market Impact of Cost Efficient Computer Adoption

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Author Info

  • Borghans, Lex

    ()
    (Maastricht University)

  • ter Weel, Bas

    ()
    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This paper offers a model to explain how computer technology has changed the labor market. It demonstrates that wage differentials between computer users and non-users are consistent with the fact that computers are first introduced in high-wage jobs because of cost efficiency. Furthermore, skill upgrading occurs because of a reemphasis on non-routine tasks after computer adoption. The model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between computer users and non-users, skill upgrading, and the changing organization and intensity of work. Finally, the predicted effects on the wage structure following the diffusion of computers are consistent with the empirical evidence.

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File URL: http://ftp.iza.org/dp792.pdf
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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 792.

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Length: 27 pages
Date of creation: Jun 2003
Date of revision:
Publication status: published in: Journal of Economic Behavior and Organization, 2004, 54 (2), 137-151
Handle: RePEc:iza:izadps:dp792

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Keywords: wage differentials by skill; computer use and skill;

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References

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  14. Borghans,Lex & Weel,Bas,ter, 2001. "What happens when agent T gets a computer?," Research Memorandum 017, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
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  17. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
  18. Borghans, Lex & ter Weel, Bas, 2003. "Are Computer Skills the New Basic Skills? The Returns to Computer, Writing and Math Skills in Britain," IZA Discussion Papers 751, Institute for the Study of Labor (IZA).
  19. Borghans,Lex & Weel,Bas,ter, 2002. "Do Older Workers Have More Trouble Using a Computer Than Younger Workers?," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
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  22. Borghans,L. & Weel,B.,ter, 2001. "What happens when agent T gets a computer?," ROA Research Memorandum 004, Maastricht University, Research Centre for Education and the Labour Market (ROA).
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