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Has ICT Polarized Skill Demand? Evidence from Eleven Countries over Twenty-Five Years

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Listed:
  • Guy Michaels

    (London School of Economics, Centre for Economic Performance, CEPR, and BREAD)

  • Ashwini Natraj

    (Centre for Economic Performance and London School of Economics)

  • John Van Reenen

    (Centre for Economic Performance, London School of Economics, NBER, and CEPR)

Abstract

We test the hypothesis that information and communication technologies (ICT) polarize labor markets by increasing demand for the highly educated at the expense of the middle educated, with little effect on low-educated workers. Using data on the United States, Japan, and nine European countries from 1980 to 2004, we find that industries with faster ICT growth shifted demand from middle-educated workers to highly educated workers, consistent with ICT-based polarization. Trade openness is also associated with polarization, but this is not robust to controlling for R&D. Technologies account for up to a quarter of the growth in demand for highly educated workers. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Guy Michaels & Ashwini Natraj & John Van Reenen, 2014. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over Twenty-Five Years," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 60-77, March.
  • Handle: RePEc:tpr:restat:v:96:y:2014:i:1:p:60-77
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    References listed on IDEAS

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    More about this item

    Keywords

    technology; ICT; skill demand; polarization; wage inequality;

    JEL classification:

    • 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
    • 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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