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Has ICT polarized skill demand?: evidence from eleven countries over 25 Years

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  • Michaels, Guy
  • Natraj, Ashwini
  • Van Reenen, John

Abstract

OECD labor markets have become more “polarized” with employment in the middle of the skill distribution falling relative to the top and (in recent years) also the bottom of the skill distribution. We test the hypothesis of Autor, Levy, and Murnane (2003) that this is partly due to information and communication technologies (ICT) complementing the analytical tasks primarily performed by highly educated workers and substituting for routine tasks generally performed by middle educated workers (with little effect on low educated workers performing manual non-routine tasks). Using industry level data on the US, Japan, and nine European countries 1980-2004 we find evidence consistent with ICT-based polarization. Industries with faster growth of ICT had greater increases in relative demand for high educated workers and bigger falls in relative demand for middle educated workers. Trade openness is also associated with polarization, but this is not robust to controls for technology (like R&D). Technologies can account for up to a quarter of the growth in demand for the college educated in the quarter century since 1980.

Suggested Citation

  • Michaels, Guy & Natraj, Ashwini & Van Reenen, John, 2010. "Has ICT polarized skill demand?: evidence from eleven countries over 25 Years," LSE Research Online Documents on Economics 28739, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:28739
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    Keywords

    Technology; trade; skill demand; wage inequality;

    JEL classification:

    • 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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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