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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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  • Borghans, Lex
  • ter Weel, Bas

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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  • 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.
    • Handle: RePEc:eee:jeborg:v:54:y:2004:i:2:p:137-151
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    Cited by:

    1. Borghans, Lex & ter Weel, Bas, 2007. "The diffusion of computers and the distribution of wages," European Economic Review, Elsevier, vol. 51(3), pages 715-748, April.
    2. Schleife, Katrin, 2004. "Computer Use and the Employment Status of Older Workers: An Analysis Based on Individual Data," ZEW Discussion Papers 04-62, ZEW - Leibniz Centre for European Economic Research.
    3. İ. Akçomak & Lex Borghans & Bas Weel, 2011. "Measuring and Interpreting Trends in the Division of Labour in the Netherlands," De Economist, Springer, vol. 159(4), pages 435-482, December.
    4. Lex Borghans & Bas ter Weel, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 37-70, September.
    5. Lex Borghans & Bas Ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.
    6. Lex Borghans & Bas Weel, 2006. "The Division of Labour, Worker Organisation, and Technological Change," Economic Journal, Royal Economic Society, vol. 116(509), pages 45-72, February.
    7. Peter Dolton & Panu Pelkonen, 2007. "The Impact of Computer Use, Computer Skills and Computer Use Intensity: Evidence from WERS 2004," CEE Discussion Papers 0081, Centre for the Economics of Education, LSE.
    8. Lex Borghans & Bas Weel, 2006. "The Division of Labour, Worker Organisation, and Technological Change," Economic Journal, Royal Economic Society, vol. 116(509), pages 45-72, February.
    9. İ. Akçomak & Lex Borghans & Bas Weel, 2011. "Measuring and Interpreting Trends in the Division of Labour in the Netherlands," De Economist, Springer, vol. 159(4), pages 435-482, December.
    10. Borghans, Lex & Weel, Bas ter & Weinberg, Bruce A., 2005. "People People: Social Capital and the Labor-Market - Outcomes of Underrepresented Groups," Research Memorandum 002, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    11. Lex Borghans & Bas Ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.
    12. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks, And Skills," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 856-892, November.
    13. Schleife, Katrin, 2005. "Computer Use and the Employment Status of Older Workers - An Analysis Based on Individual Data," Darmstadt Discussion Papers in Economics 145, Darmstadt University of Technology, Department of Law and Economics.
    14. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks and Skills," CPB Discussion Paper 269.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks and Skills," CPB Discussion Paper 269, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Cindy Zoghi & Sabrina Wulff Pabilonia, 2007. "Which workers gain upon adopting a computer?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(2), pages 423-444, May.
    17. Lex Borghans & Bas ter Weel, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 37-70, September.
    18. Young-Sung Lee, 2016. "Competition, Wage, and Agglomeration Diseconomy," International Regional Science Review, , vol. 39(3), pages 318-350, July.

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    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • 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

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