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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
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    File URL: https://doi.org/10.1787/5jlzfl2p5rzq-en
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    References listed on IDEAS

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    Cited by:

    1. Monika Köppl-turyna & Michael Christl, 2018. "Returns to Skills or Returns to Tasks? A Comment on Hanushek et al. (2015)," Economics Bulletin, AccessEcon, vol. 38(2), pages 783-790.
    2. repec:oup:cesifo:v:63:y:2017:i:3:p:255-269. is not listed on IDEAS
    3. Franziska Hampf & Ludger Woessmann, 2017. "Vocational vs. General Education and Employment over the Life Cycle: New Evidence from PIAAC," CESifo Economic Studies, CESifo, vol. 63(3), pages 255-269.
    4. De La Rica, Sara & Gortazar, Lucas, 2017. "Digitalization at work, Job Tasks and Wages: Cross-Country evidence from PIAAC1," GLO Discussion Paper Series 22, Global Labor Organization (GLO).
    5. Martin, John P., 2017. "Policies to Expand Digital Skills for the Machine Age," IZA Policy Papers 123, Institute of Labor Economics (IZA).
    6. Stockinger, Bastian, 2017. "The effect of broadband internet on establishments' employment growth: evidence from Germany," IAB Discussion Paper 201719, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Fabienne Kiener & Ann-Sophie Gnehm & Simon Clematide & Uschi Backes-Gellner, 2019. "Different Types of IT Skills in Occupational Training Curricula and Labor Market Outcomes," Economics of Education Working Paper Series 0159, University of Zurich, Department of Business Administration (IBW).
    8. Fairlie, Robert W. & Bahr, Peter Riley, 2018. "The effects of computers and acquired skills on earnings, employment and college enrollment: Evidence from a field experiment and California UI earnings records," Economics of Education Review, Elsevier, vol. 63(C), pages 51-63.
    9. Rainer Kotschy & Uwe Sunde & Tommaso MonacelliManaging Editor, 2018. "Can education compensate the effect of population ageing on macroeconomic performance?," Economic Policy, CEPR;CES;MSH, vol. 33(96), pages 587-634.
    10. Eric A. Hanushek & Marc Piopiunik & Simon Wiederhold, 2014. "The Value of Smarter Teachers: International Evidence on Teacher Cognitive Skills and Student Performance," CESifo Working Paper Series 5120, CESifo Group Munich.
    11. Irene Bertschek & Reiner Clement & Daniel Buhr & Hartmut Hirsch-Kreinsen & Oliver Falck & Alexandra Heimisch & Anita Jacob-Puchalska & Andreas Mazat, 2015. "Industrie 4.0: Digitale Wirtschaft – Herausforderung und Chance für Unternehmen und Arbeitswelt," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(10), pages 03-18, May.
    12. Martin, John P., 2018. "Skills for the 21st Century: Findings and Policy Lessons from the OECD Survey of Adult Skills," IZA Policy Papers 138, Institute of Labor Economics (IZA).
    13. Noemi Oggero & Maria Cristina Rossi & Elisa Ughetto, 2019. "Entrepreneurial Spirits in Women and Men. The Role of Financial Literacy and Digital Skills," Working papers 059, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    14. repec:cep:cverdp:003 is not listed on IDEAS
    15. Maarten Goos & Melanie Arntz & Ulrich Zierahn & Terry Gregory & Stephanie Carretero Gomez & Ignacio Gonzalez Vazquez & Koen Jonkers, 2019. "The Impact of Technological Innovation on the Future of Work," JRC Working Papers on Labour, Education and Technology 2019-03, Joint Research Centre (Seville site).
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    17. Perry Anja & Rammstedt Beatrice, 2016. "The Research Data Center PIAAC at GESIS," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(5), pages 581-593, October.
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    More about this item

    Keywords

    broadband; earnings; ICT skills; international comparisons;

    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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