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Understanding the technoloy of computer technology diffusion: explaining computer adoption patterns and implications for the wage structure

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  • Bas ter Weel
  • L. Borghans

Abstract

We review the empirical literature about the implications of the computerization of the labor market to see whether it can explain observed computer adoption patterns and (long-term) changes in the wage structure. Evidence from empirical micro studies turns out to be inconsistent with macro studies that are based on CES production functions. We propose a micro foundation for the CES production function that allows for changes in the underlying structure. We adapt the macro model by incorporating computer skills, complementary skills and fixed costs for computer technology usage suggested by the micro literature. It turns out that fixed costs for computer technology usage explain different patterns of computer adoption and diffusion between several types of workers and countries; it also provides very plausible patterns of the timing of wage inequality and developments over time.

Suggested Citation

  • Bas ter Weel & L. Borghans, 2009. "Understanding the technoloy of computer technology diffusion: explaining computer adoption patterns and implications for the wage structure," CPB Discussion Paper 117, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:117
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • 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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