IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v239y2019i3p363-398n1.html
   My bibliography  Save this article

Economy 4.0 – Digitalisation and Its Effect on Wage Inequality

Author

Listed:
  • Mönnig Anke

    (Institute of Economic Structures Research, Osnabrück, Germany)

  • Maier Tobias

    (Federal Institute for Vocational Education and Training, Bonn, Germany)

  • Zika Gerd

    (Institute for Employment Research, Nürnberg, Germany)

Abstract

This paper contributes to the discussion of the impact of digital transformation on labour markets by analysing the impact on wage inequality.The novelty of this paper is on the one hand the quantitative approach that applies a macroeconometric input-output model which accounts for circular flow in the economy and feedback loops. Most of the studies on wage inequality and digital transformation focus on ex-post analysis. The applied quantitative model used in this paper also allows to perform ex-ante analysis. This is important, as economy 4.0 is not yet reflected in current datasets which makes statements about the impact of economy 4.0 on wage inequality on basis of ex-post analysis difficult.On the other hand, it uses the inequality measures S80/S20 that has been applied to a unique dataset on employment and wages. The dataset differentiates on industry and occupational level. That allows to identify industry*occupation combination and their location in the upper and/or lower 20 % share ratio of wage distribution. The analysis demonstrates that digital transformation increases wage inequality, however to a low extent. The increase in wage inequality is already implemented in the reference scenario due to structural and demographic change. Digital transformation strengthens the impact of structural change on wage inequality. Especially in the long run, wage inequality rises stronger than in the reference scenario.Because the digital transformation scenario does not confirm the polarization hypothesis, the impact of economy 4.0 on wage inequality remains rather low. The increasing demand of high-skilled employees is reflected in an increase in wage inequality. However, the relatively low impact of digitalisation on low-skilled employees prevents a stronger increase in wage inequality.

Suggested Citation

  • Mönnig Anke & Maier Tobias & Zika Gerd, 2019. "Economy 4.0 – Digitalisation and Its Effect on Wage Inequality," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 363-398, June.
    • Handle: RePEc:jns:jbstat:v:239:y:2019:i:3:p:363-398:n:1
    DOI: 10.1515/jbnst-2017-0151
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2017-0151
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2017-0151?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alan B. Krueger, 2002. "Inequality, Too Much of a Good Thing," Working Papers 845, Princeton University, Department of Economics, Industrial Relations Section..
    2. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    3. Wolfgang Nierhaus, 2019. "Wirtschaftskonjunktur 2018: Prognose und Wirklichkeit," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(03), pages 22-29, February.
    4. Gernandt Johannes & Pfeiffer Friedhelm, 2007. "Rising Wage Inequality in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(4), pages 358-380, August.
    5. Fitzenberger, Bernd, 2012. "Expertise zur Entwicklung der Lohnungleichheit in Deutschland," Working Papers 04/2012, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    6. Maier, Tobias & Neuber-Pohl, Caroline & Mönnig, Anke & Zika, Gerd & Kalinowski, Michael, 2017. "Modelling reallocation processes in long-term labour market projections," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 50(1), pages 67-90.
    7. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    8. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 843-881.
    9. Bonin, Holger & Gregory, Terry & Zierahn, Ulrich, 2015. "Übertragung der Studie von Frey/Osborne (2013) auf Deutschland," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, volume 57, number 123310.
    10. repec:pri:cepsud:87krueger is not listed on IDEAS
    11. Maier, Tobias & Neuber-Pohl, Caroline & Mönnig, Anke & Zika, Gerd & Kalinowski, Michael, 2017. "Modelling reallocation processes in long-term labour market projections," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 50(1), pages 67-90.
    12. Biewen, Martin & Fitzenberger, Bernd & de Lazzer, Jakob, 2017. "Rising wage inequality in Germany: Increasing heterogeneity and changing selection into full-time work," ZEW Discussion Papers 17-048, ZEW - Leibniz Centre for European Economic Research.
    13. repec:fth:prinin:466 is not listed on IDEAS
    14. repec:fth:prinin:464a is not listed on IDEAS
    15. Tobias Maier & Caroline Neuber-Pohl & Anke Mönnig & Gerd Zika & Michael Kalinowski, 2017. "Modelling reallocation processes in long-term labour market projections [Modellierung von Anpassungsprozessen in langfristigen Arbeitsmarktprojektionen]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 50(1), pages 67-90, August.
    16. Markus M. Grabka & Ursina Kuhn, 2012. "The Evolution of Income Inequality in Germany and Switzerland since the Turn of the Millennium," SOEPpapers on Multidisciplinary Panel Data Research 464, DIW Berlin, The German Socio-Economic Panel (SOEP).
    17. Alan Krueger, 2002. "Inequality, Too Much of a Good Thing," Working Papers 845, Princeton University, Department of Economics, Industrial Relations Section..
    18. Dengler, Katharina & Matthes, Britta, 2015. "Folgen der Digitalisierung für die Arbeitswelt : Substituierbarkeitspotenziale von Berufen in Deutschland," IAB-Forschungsbericht 201511, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    19. Grömling, Michael & Lichtblau, Karl, 2006. "Deutschland vor einem neuen Industriezeitalter?," IW-Analysen, Institut der deutschen Wirtschaft (IW) / German Economic Institute, volume 20, number 20.
    20. Kai Daniel Schmid & Ulrike Stein, 2013. "Explaining Rising Income Inequality in Germany, 1991-2010," IMK Studies 32-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    21. Maik Heinemann, 2008. "Messung und Darstellung von Ungleichheit," Working Paper Series in Economics 108, University of Lüneburg, Institute of Economics.
    22. Maier, Tobias & Neuber-Pohl, Caroline & Mönnig, Anke & Zika, Gerd & Kalinowski, Michael, 2017. "Modelling reallocation processes in long-term labour market projections," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 50(1), pages 67-90.
    23. Alan B. Krueger, 2002. "Inequality, Too Much of a Good Thing," Working Papers 845, Princeton University, Department of Economics, Industrial Relations Section..
    24. Andrea Stocker & Anett Großmann & Friedrich Hinterberger & Marc Wolter, 2014. "A low growth path in Austria: potential causes, consequences and policy options," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(3), pages 445-465, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Biewen, Martin & Fitzenberger, Bernd & de Lazzer, Jakob, 2017. "Rising Wage Inequality in Germany: Increasing Heterogeneity and Changing Selection into Full-Time Work," IZA Discussion Papers 11072, Institute of Labor Economics (IZA).
    2. Dirk Antonczyk & Thomas DeLeire & Bernd Fitzenberger, 2018. "Polarization and Rising Wage Inequality: Comparing the U.S. and Germany," Econometrics, MDPI, vol. 6(2), pages 1-33, April.
    3. Koomen, Miriam & Backes-Gellner, Uschi, 2022. "Occupational tasks and wage inequality in West Germany: A decomposition analysis," Labour Economics, Elsevier, vol. 79(C).
    4. Franziska Brall & Ramona Schmid, 2023. "Automation, robots and wage inequality in Germany: A decomposition analysis," LABOUR, CEIS, vol. 37(1), pages 33-95, March.
    5. Carrillo-Tudela, Carlos & Launov, Andrey & Robin, Jean-Marc, 2021. "The fall in german unemployment: A flow analysis," European Economic Review, Elsevier, vol. 132(C).
    6. Tobias Maier & Anke Mönnig & Gerd Zika, 2021. "Folgen der COVID-19-Krise auf die kurz-, mittel- und langfristigen Beschäftigungs- und Entlohnungschancen nach Berufen [Consequences of the COVID-19 crisis on short-, medium- and long-term employme," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 15(2), pages 107-138, June.
    7. Lorenz, Hanno & Stephany, Fabian, 2018. "Back to the future: Changing job profiles in the digital age," Working Papers 13, Agenda Austria.
    8. Weigert, Benjamin & Klemm, Marcus, 2015. "Composition matters! Wage inequality and the demographic and educational structure of the labor force in Germany," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112914, Verein für Socialpolitik / German Economic Association.
    9. Kai Daniel Schmid & Ulrike Stein, 2013. "Explaining Rising Income Inequality in Germany, 1991-2010," IMK Studies 32-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Bernd Fitzenberger & Arnim Seidlitz, 2020. "Die Lohnungleichheit von Vollzeitbeschäftigten in Deutschland: Rückblick und Überblick [Wage inequality among the full-time employed in Germany revisited: An overview]," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 14(2), pages 125-143, July.
    11. Martin Biewen & Bernd Fitzenberger & Jakob de Lazzer, 2018. "The role of employment interruptions and part-time work for the rise in wage inequality," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-34, December.
    12. K. Sommerfeld, 2013. "Higher and higher? Performance pay and wage inequality in Germany," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4236-4247, October.
    13. Martin Biewen & Martin Ungerer & Max Löffler, 2019. "Why Did Income Inequality in Germany Not Increase Further After 2005?," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 471-504, November.
    14. Ulrike Stein, 2017. "Earnings Inequality in Germany: A Decomposition-Analysis," SOEPpapers on Multidisciplinary Panel Data Research 955, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Konstantin Koerner, 2023. "The wage effects of offshoring to the East and West: evidence from the German labor market," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(2), pages 399-435, May.
    16. Klemm, Marcus & Weigert, Benjamin, 2014. "Does composition matter? Wage inequality and the demographic and educational structure of the labor force in Gemany," Working Papers 06/2014, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    17. Fabian Stephany & Hanno Lorenz, 2021. "The Future of Employment Revisited: How Model Selection Determines Automation Forecasts," Papers 2104.13747, arXiv.org.
    18. Hanno Lorenz & Fabian Stephany & Jan Kluge, 2023. "The future of employment revisited: how model selection affects digitization risks," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(2), pages 323-350, May.
    19. Aepli, Manuel, 2019. "Technological change and occupation mobility: A task-based approach to horizontal mismatch," GLO Discussion Paper Series 361, Global Labor Organization (GLO).
    20. Sasiwimon Warunsiri Paweenawat & Lusi Liao, 2022. "Brain over Brawn: Job Polarization, Structural Change, and Skill Prices," PIER Discussion Papers 189, Puey Ungphakorn Institute for Economic Research.

    More about this item

    Keywords

    wage inequality; digitalisation; projection; scenario analysis;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:239:y:2019:i:3:p:363-398:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.