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Skill-based technology adoption: firm-level evidence from Brazil and India

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  • Rupert Harrison

    (Institute for Fiscal Studies)

Abstract

This paper provides the first firm-level econometric evidence on the skill-bias of ICT in developing countries using a unique new dataset of manufacturing firms in Brazil and India. I use detailed information on firms' adoption of ICT and the educational composition of their workforce to estimate skill-share equations in levels and long differences. The results are strongly suggestive of skill-biased ICT adoption, with ICT able to explain up to a third of the average increase in the share of skilled workers in Brazil and up to one half in India. I then use variation in the relative supply of skilled workers across states within each country to identify the skill-bias of ICT. The results are again consistent with skill-bias in both countries, and are mainly robust to various methods of controlling for unobserved heterogeneity across states. The magnitudes of the estimated effects from both approaches are surprisingly similar for the two countries. Overall, the results suggest that new developments in ICT are diffusing rapidly through the manufacturing sectors of both Brazil and India, with similar implications for the demand for skills in two very different and geographically distant countries. This evidence is consistent with ongoing pervasive skill-biased technological change associated with ICT throughout much of the developed and developing world. The implications for future developments in inequality both within and between countries are potentially far-reaching.

Suggested Citation

  • Rupert Harrison, 2008. "Skill-based technology adoption: firm-level evidence from Brazil and India," IFS Working Papers W08/03, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:08/03
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    File URL: http://www.ifs.org.uk/wps/wp0803.pdf
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    Cited by:

    1. Sadayuki Takii & Dionisius Narjoko, . "Revisiting How Globalization Affects Wage Skill Premium in Indonesia Manufacturing," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Lee, Jong-Wha & Wie, Dainn, 2015. "Technological Change, Skill Demand, and Wage Inequality: Evidence from Indonesia," World Development, Elsevier, vol. 67(C), pages 238-250.
    3. Savita Bhat & N S Siddharthan, 2010. "Human Capital, Labour Productivity and Employment," Working Papers id:3110, eSocialSciences.
    4. repec:idb:brikps:71298 is not listed on IDEAS

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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