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The New Wave? The Role of Human Capital and STEM Skills in Technology Adoption in the UK

Author

Listed:
  • Draca, Mirko

    (University of Warwick, CAGE Research Centre and CEP)

  • Nathan, Max

    (University College London, CEP)

  • Nguyen-Tien, Viet

    (CEP, IGC, London School of Economics)

  • Oliveira-Cunha, Juliana

    (CEP, University College London)

  • Rosso, Anna

    (CEP, University of Insubria)

  • Valero, Anna

    (CEP, POID, London School of Economics)

Abstract

Which types of human capital influence the adoption of advanced technologies? We study the skill-biased adoption of information and communication technologies (ICT) across two waves in the UK. Specifically, we compare the ‘new wave' of cloud and machine learning / AI technologies during the 2010s - pre-LLM - with the previous wave of personal computer adoption in the 1990s and early 2000s. At the area-level we see the emergence of a distinct STEM-biased adoption effect for the second wave of cloud and machine learning / AI technologies (ML/AI), alongside a general skill-biased effect. A one-standard deviation increase in the baseline share of STEM workers in areas is associated with around 0.3 of a standard deviation higher adoption of cloud and ML/AI. We find similar effects at the firm level where we are able to test for the influence of a wide range of skills. In turn, this STEM-biased adoption pattern has encouraged the concentration of these technologies, leading to more acute differences between high-tech and low-tech areas and firms. In contrast with classical technology diffusion, recent cloud and ML/AI adoption in the UK seems more likely to widen inequalities than reduce them.

Suggested Citation

  • Draca, Mirko & Nathan, Max & Nguyen-Tien, Viet & Oliveira-Cunha, Juliana & Rosso, Anna & Valero, Anna, 2024. "The New Wave? The Role of Human Capital and STEM Skills in Technology Adoption in the UK," CAGE Online Working Paper Series 726, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:726
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    Cited by:

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    2. Fontanelli, Luca & Calvino, Flavio & Criscuolo, Chiara & Nesta, Lionel & Verdolini, Elena, 2025. "Human after all: Occupations at the core of AI adoption," Labour Economics, Elsevier, vol. 95(C).
    3. Flavio Calvino & Luca Fontanelli, 2026. "Decoding AI: an early look at how French firms use AI," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 16(1), pages 51-93, March.
    4. Juliana Oliveira-Cunha & Bruno Serra-Lorenzo & Anna Valero, 2025. "Innovation through crises in the 2020s: survey evidence on digital, AI and net zero innovation in UK firms," CEP Reports 50, Centre for Economic Performance, LSE.

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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