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Structural Transformation and the Rise of Information Technology

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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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    Cited by:

    1. Ashworth, Jared & Ransom, Tyler, 2019. "Has the college wage premium continued to rise? Evidence from multiple U.S. surveys," Economics of Education Review, Elsevier, vol. 69(C), pages 149-154.
    2. Pugsley, Benjamin, 2018. "Comment on “Structural transformation and the rise of information technology” by Gallipoli and Makridis," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 111-116.
    3. Lin, Gary C., 2019. "High-skilled immigration and native task specialization in U.S. cities," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 289-305.

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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