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Structural transformation and the rise of information technology

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  • Gallipoli, Giovanni
  • Makridis, Christos A.

Abstract

Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.

Suggested Citation

  • Gallipoli, Giovanni & Makridis, Christos A., 2018. "Structural transformation and the rise of information technology," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 91-110.
  • Handle: RePEc:eee:moneco:v:97:y:2018:i:c:p:91-110
    DOI: 10.1016/j.jmoneco.2018.05.005
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    Cited by:

    1. Ashworth, Jared & Ransom, Tyler, 2019. "Has the college wage premium continued to rise? Evidence from multiple U.S. surveys," Economics of Education Review, Elsevier, vol. 69(C), pages 149-154.
    2. Lin, Gary C., 2019. "High-skilled immigration and native task specialization in U.S. cities," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 289-305.
    3. Pugsley, Benjamin, 2018. "Comment on “Structural transformation and the rise of information technology” by Gallipoli and Makridis," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 111-116.

    More about this item

    Keywords

    Information technology; Productivity; Skill premia; Structural change; Tasks;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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