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A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive

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  • Paul Gaggl
  • Greg C. Wright

Abstract

We study the short-run causal effect of Information and Communication Technology (ICT) adoption on employment and wage distribution. We exploit a natural experiment generated by a tax allowance on ICT investments and find that the primary effect of ICT is to complement nonroutine, cognitive-intensive work. We also find that the ICT investments led to organizational changes that were associated with increased inequality within the firm and we discuss our findings in the context of theories of ICT adoption and wage inequality. We find that tasks-based models of technological change best fit the patterns that we observe.

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  • Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
  • Handle: RePEc:aea:aejapp:v:9:y:2017:i:3:p:262-94
    Note: DOI: 10.1257/app.20150411
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    Cited by:

    1. repec:nbr:nberch:14029 is not listed on IDEAS
    2. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    3. repec:eee:labeco:v:57:y:2019:i:c:p:164-176 is not listed on IDEAS
    4. Paul Gaggl & Sylvia Kaufmann, 2014. "The Cyclical Component of Labor Market Polarization and Jobless Recoveries in the US," Working Papers 14.03, Swiss National Bank, Study Center Gerzensee.
    5. Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
    6. repec:eee:ecmode:v:70:y:2018:i:c:p:239-244 is not listed on IDEAS
    7. Bode, Eckhardt & Brunow, Stephan & Ott, Ingrid & Sorgner, Alina, 2016. "Worker personality: Another skill bias beyond education in the digital age," Kiel Working Papers 2057, Kiel Institute for the World Economy (IfW).
    8. Almeida,Rita Kullberg & Fernandes,Ana Margarida & Viollaz,Mariana & Almeida,Rita Kullberg & Fernandes,Ana Margarida & Viollaz,Mariana, 2017. "Does the adoption of complex software impact employment composition and the skill content of occupations ? evidence from Chilean firms," Policy Research Working Paper Series 8110, The World Bank.
    9. Emmanuel Vazquez & Hernan Winkler, 2017. "How Is the Internet Changing Labor Market Arrangements? Evidence from Telecommunications Reforms in Europe," CEDLAS, Working Papers 0210, CEDLAS, Universidad Nacional de La Plata.
    10. repec:spr:jlabrs:v:52:y:2018:i:1:d:10.1186_s12651-018-0242-z is not listed on IDEAS
    11. Mariana Viollaz, 2017. "ICT Adoption in Micro and Small Firms: Can Internet Access Improve Labor Productivity?," CESifo Working Paper Series 6839, CESifo Group Munich.
    12. repec:eee:moneco:v:91:y:2017:i:c:p:69-87 is not listed on IDEAS
    13. Cortes, Guido Matias & Jaimovich, Nir & Siu, Henry E., 2017. "Disappearing routine jobs: Who, how, and why?," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 69-87.
    14. Cortes, Guido Matias & Salvatori, Andrea, 2019. "Delving into the demand side: Changes in workplace specialization and job polarization," Labour Economics, Elsevier, vol. 57(C), pages 164-176.
    15. Rowena Gray & Giulia Montresor & Greg C. Wright, 2017. "Processing Immigration Shocks: Firm Responses on the Innovation Margin," CESifo Working Paper Series 6624, CESifo Group Munich.
    16. repec:bla:ausecr:v:50:y:2017:i:4:p:377-397 is not listed on IDEAS
    17. Andrea Salvatori, 2018. "The anatomy of job polarisation in the UK," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-15, December.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • 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
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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