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The diffusion of computers and the distribution of wages

Author

Listed:
  • Borghans, L.

    (Macro, International & Labour Economics)

  • ter Weel, B.J.

    (Macro, International & Labour Economics)

Abstract

When workers adopt technology at the point where the costs equal the increased productivity, output per worker increases immediately, while the productivity benefits increase only gradually if the costs continue to fall. As a result, workers in computer-adopting labor market groups experience an immediate fall in wages due to increased supply. On the other hand, adopting workers experience wage increases with some delay. This model explains why increased computer use does not immediately lead to higher wage inequality. More specifically, the results of the model are shown to be consistent with the question why withingroup wage inequality among skilled workers as a result of computer technology adoption in the United States increased in the 1970s, while between-group wage inequality and withingroup wage inequality among the unskilled did not start to increase until the 1980s. The model also suggests that the slow diffusion of computer technology in Germany along with the absence of major changes in the wage structure in the 1980s is consistent with the more compressed German wage structure. Finally, the theoretical predictions seem to be of the right magnitude to explain the empirical quantities observed in the data.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Borghans, L. & ter Weel, B.J., 2002. "The diffusion of computers and the distribution of wages," ROA Research Memorandum 5E, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    • Handle: RePEc:unm:umaror:20025e
    DOI: 10.26481/umaror.200205E
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    Citations

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    Cited by:

    1. Lex Borghans & Bas ter Weel, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 37-70, September.
    2. Carlos Medina & Christian Manuel Posso Su�rez, 2010. "Technical Change and Polarization of the Labor Market: Evidence for Brazil, Colombia and Mexico," Borradores de Economia 7269, Banco de la Republica.
    3. Spitz, Alexandra & Bertschek, Irene, 2003. "IT, Organizational Change and Wages," ZEW Discussion Papers 03-69, ZEW - Leibniz Centre for European Economic Research.
    4. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    5. Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2023. "Does context matter? Exploring the effects of productive structures on the relationship between innovation and workforce skills’ complementarity," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 1991-2011, June.
    6. Simon Wiederhold & Christina Langer, 2023. "The Value of Early-Career Skills," Growth Lab Working Papers 204, Harvard's Growth Lab.
    7. Chengyou Li & Zhouhao Sha & Tao Sun, 2023. "Rural Households’ Internet Use on Common Prosperity: Evidence from the Chinese Social Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 170(3), pages 797-823, December.
    8. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue nov.
    9. Gould, Eric D., 2005. "Inequality and ability," Labour Economics, Elsevier, vol. 12(2), pages 169-189, April.
    10. Mareva Sabatier & Bérangère Legendre, 2017. "The puzzle of older workers’ employment: distance to retirement and health effects," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(1), pages 45-61, April.
    11. Florentino Felgueroso & Sergi Jiménez Martín, 2009. "The "New Growth Model". How and with Whom?," Working Papers 2009-39, FEDEA.
    12. Hofer, Helmut & Riedel, Monika, 2003. "Computer Use and the Wage Structure in Austria," Economics Series 147, Institute for Advanced Studies.
    13. Cornelia NOVAC-UDUDEC & Cristina ENACHE & Corina SBUGHEA, 2011. "The IT Impact on the Productivity and the Organizational Performance of Firms in Romania. A model of Empirical Analysis," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 177-183.
    14. Chiara Broccolini & Alessia Lo Turco & Andrea Presbitero & Stefano Staffolani, 2011. "Individual Earnings, International Outsourcing and Technological Change: Evidence from Italy," International Economic Journal, Taylor & Francis Journals, vol. 25(1), pages 29-46.
    15. Lex Borghans & Bas ter Weel, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 37-70, September.
    16. Borghans, L. & ter Weel, B.J., 2002. "Do older workers have more trouble using a computer than younger workers?," ROA Research Memorandum 1E, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    17. Spitz, Alexandra, 2004. "Using Methods of Treatment Evaluation to Estimate the Wage Effect of IT Usage," ZEW Discussion Papers 04-67, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • 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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