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Research Note---Comparing IT Workers’ Compensation Across Country Contexts: Demographic, Human Capital, and Institutional Factors

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  • Natalia Levina

    (Stern School of Business, New York University, Information Systems Group/IOMS, 44 West Fourth Street, New York, New York 10012)

  • Mingdi Xin

    (Stern School of Business, New York University, Information Systems Group/IOMS, 44 West Fourth Street, New York, New York 10012)

Abstract

As the IT workforce becomes global, it is increasingly important to understand the factors affecting IT workers’ compensation in labor markets distributed across the globe. Ang et al. (2002) published the first in-depth analysis of compensation for IT professionals juxtaposing human capital endowment (education and experience) and institutional determinants (firm’s size, industry, and sector) of compensation in the Singaporean economy. In this paper, we explore the influence of particular national economies on IT workers’ compensation. We draw on research into the roots of wage differentials in labor economics and build on the Ang et al. research to present a multilevel analysis of IT workers’ compensation in the United States, analyzing the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS) data for 1997, 2001, and 2003.We find that, while institutional differences in Singapore mattered only in conjunction with individual factors, in the U.S. institutional differences had a direct effect on IT workers’ wages. As tightness of IT labor supply decreased in the United States in the early 2000s, the influence of a firm’s size on wages became more pronounced. Also, female IT workers and workers without a college degree fared worse than their male and college-educated counterparts as the IT job market slowed down.We suggest that factors such as presence of job search friction, diversity in the educational system, geographical differences in cost of living, labor mobility, and shortages in IT labor supply vis-à-vis demand help explain the differences among countries. We conclude by outlining the implications of these findings for IT workers, firms, and policy makers.

Suggested Citation

  • Natalia Levina & Mingdi Xin, 2007. "Research Note---Comparing IT Workers’ Compensation Across Country Contexts: Demographic, Human Capital, and Institutional Factors," Information Systems Research, INFORMS, vol. 18(2), pages 193-210, June.
    • Handle: RePEc:inm:orisre:v:18:y:2007:i:2:p:193-210
    DOI: 10.1287/isre.1070.0121
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    Cited by:

    1. Prasanna Tambe & Lorin M. Hitt, 2012. "Now IT's Personal: Offshoring and the Shifting Skill Composition of the U.S. Information Technology Workforce," Management Science, INFORMS, vol. 58(4), pages 678-695, April.
    2. Prasanna Tambe & Xuan Ye & Peter Cappelli, 2019. "Paying to Program? Engineering Brand and High-Tech Wages," NBER Working Papers 25552, National Bureau of Economic Research, Inc.
    3. Il-Horn Hann & Jeffrey A. Roberts & Sandra A. Slaughter, 2013. "All Are Not Equal: An Examination of the Economic Returns to Different Forms of Participation in Open Source Software Communities," Information Systems Research, INFORMS, vol. 24(3), pages 520-538, September.
    4. Prasanna Tambe, 2014. "Big Data Investment, Skills, and Firm Value," Management Science, INFORMS, vol. 60(6), pages 1452-1469, June.
    5. Jonathan Whitaker & Sunil Mithas & Che-Wei Liu, 2019. "Beauty Is in the Eye of the Beholder: Toward a Contextual Understanding of Compensation of Information Technology Professionals Within and Across Geographies," Information Systems Research, INFORMS, vol. 30(3), pages 892-911, September.
    6. Damien Joseph & Soon Ang & Sandra A. Slaughter, 2015. "Turnover or Turnaway? Competing Risks Analysis of Male and Female IT Professionals’ Job Mobility and Relative Pay Gap," Information Systems Research, INFORMS, vol. 26(1), pages 145-164, March.
    7. Sunil Mithas & M. S. Krishnan, 2009. "From Association to Causation via a Potential Outcomes Approach," Information Systems Research, INFORMS, vol. 20(2), pages 295-313, June.
    8. Luciana Castro Gonçalves, 2012. "Learning Dynamics across Boundaries of IS Context: A Structural perspective to Support Knowledge Management," Post-Print hal-02340306, HAL.
    9. Prasanna Tambe & Xuan Ye & Peter Cappelli, 2020. "Paying to Program? Engineering Brand and High-Tech Wages," Management Science, INFORMS, vol. 66(7), pages 3010-3028, July.
    10. Keongtae Kim & Sunil Mithas & Jonathan Whitaker & Prasanto K. Roy, 2014. "Research Note —Industry-Specific Human Capital and Wages: Evidence from the Business Process Outsourcing Industry," Information Systems Research, INFORMS, vol. 25(3), pages 618-638, September.
    11. Prasanna Tambe & Lorin M. Hitt, 2014. "Job Hopping, Information Technology Spillovers, and Productivity Growth," Management Science, INFORMS, vol. 60(2), pages 338-355, February.

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