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Returns to ICT Skills

Author

Listed:
  • Oliver Falck

    (University of Munich (LMU))

  • Alexandra Heimisch

    (University of Munich (LMU))

  • Simon Wiederhold

    (Ifo Institute for Economic Research, University of Munich)

Abstract

How important is mastering information and communication technologies (ICT) in modern labour markets? We present the first evidence on this question, drawing on unique data that provide internationally comparable information on ICT skills in 19 countries from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). Our identification strategy relies on the idea that Internet access is important in the formation of ICT skills, and we implement instrumental-variable models that leverage exogenous variation in Internet availability across countries and across German municipalities. ICT skills are substantially rewarded in the labour market: returns are at 8% for a one standard-deviation increase in ICT skills in the international analysis and are almost twice as large in Germany. Placebo estimations show that exogenous Internet availability cannot explain numeracy or literacy skills, suggesting that our identifying variation is independent of a person’s general ability. Our results further suggest that the proliferation of computers complements workers in executing abstract tasks that require ICT skills. Quelle est l'importance de la maîtrise des technologies de l’information et de la communication (TIC) sur les marchés du travail modernes ? Nous présentons ici les premières réponses à cette question, à partir de données uniques offrant des informations comparables à l’échelle internationale sur les compétences en TIC dans 19 pays. Notre stratégie d'identification repose sur l'idée que l'accès à Internet joue un rôle important dans la formation des compétences en TIC, et nous appliquons des modèles à variables instrumentales utilisant la variation exogène de l’accès à Internet entre les pays et entre différentes municipalités allemandes. Les compétences en TIC font l’objet d’une reconnaissance substantielle sur le marché du travail : les rendements s’établissent ainsi à 8 % pour une augmentation d'un écart-type des compétences en TIC dans l'analyse internationale et sont presque deux fois plus élevés en Allemagne. Des estimations placebo montrent qu’un accès exogène à Internet ne constitue pas un facteur explicatif des compétences en numératie ou en littératie, semblant indiquer que notre identification d’une variation est indépendante des aptitudes générales des individus. Nos résultats suggèrent en outre que la multiplication du nombre d’ordinateurs assiste les travailleurs dans l'exécution de tâches abstraites nécessitant des compétences en TIC.

Suggested Citation

  • Oliver Falck & Alexandra Heimisch & Simon Wiederhold, 2016. "Returns to ICT Skills," OECD Education Working Papers 134, OECD Publishing.
  • Handle: RePEc:oec:eduaab:134-en
    DOI: 10.1787/5jlzfl2p5rzq-en
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    Keywords

    broadband; earnings; ICT skills; international comparisons;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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