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Structural Transformation and the Rise of Information Technology

Author

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  • Giovanni Gallipoli

    () (Vancouver School of Economics, University of British Columbia, Canada; The Rimini Centre for Economic Analysis)

  • Christos A. Makridis

    () (Department of Management Science & Engineering, Department of Economics, Stanford University, USA)

Abstract

Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census micro-data between 1970 and 2015, we show that: (i) the share of workers in IT-intensive jobs has expanded significantly, with little or no pause; (ii) IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT employment share is closely associated with declines in the manufacturing employment share. Although the earnings premia for college-educated and high cognitive/non-routine skilled workers have declined in the aggregate since 2000, we show that they have continued growing in IT jobs. We subsequently introduce an equilibrium model of occupational sorting based on comparative advantage between IT and non-IT jobs to quantify the contribution of IT jobs towards accelerating the pace of structural transformation. Our results suggest that technological growth among IT jobs has played a major role in accounting for the surge in high tech service labor productivity since 1980.

Suggested Citation

  • Giovanni Gallipoli & Christos A. Makridis, 2017. "Structural Transformation and the Rise of Information Technology," Working Paper series 17-30, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:17-30
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    References listed on IDEAS

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    1. Berthold Herrendorf & Christopher Herrington & Ákos Valentinyi, 2015. "Sectoral Technology and Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 104-133, October.
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    8. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
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    12. Zsófia L. Bárány & Christian Siegel, 2018. "Job Polarization and Structural Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 57-89, January.
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