IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/763.html
   My bibliography  Save this paper

Routine biased technological change and wage inequality: do workers' perceptions matter?

Author

Listed:
  • Vannutelli, Silvia
  • Scicchitano, Sergio
  • Biagetti, Marco

Abstract

The Routine-Biased Technological Change (RBTC) has been called as a relatively novel technology-based explanation of social changes like job and wage polarization. In this paper we investigate the wage inequality between routine and non-routine workers along the wage distribution in Italy. Thanks to unique survey data, we can estimate the wage differential using both actual and perceived level of routine intensity of jobs to classify workers. We adopt semi-parametric decomposition techniques to quantify the importance of characteristics of workers in explaining the gaps. We also employ non-parametric techniques to account for self-selection bias. We find evidence of a significant U-shaped pattern of the wage gap, according to both definitions, with non-routine workers earning always significantly more than routine workers. Results show that workers' characteristics fully explain the gap in the case of perceived routine, while they account for no more than 50% of the gap across the distribution in the case of actual routine. Thus, results highlight the importance of taking into account workers' perceptions when analyzing determinants of wage inequality. Overall, we confirm that, after leading to job polarization, RBTC induced a similar polarizing effects on wages in Italy.

Suggested Citation

  • Vannutelli, Silvia & Scicchitano, Sergio & Biagetti, Marco, 2021. "Routine biased technological change and wage inequality: do workers' perceptions matter?," GLO Discussion Paper Series 763, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:763
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/228709/1/GLO-DP-0763.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cortes, Guido Matias & Jaimovich, Nir & Nekarda, Christopher J. & Siu, Henry E., 2020. "The dynamics of disappearing routine jobs: A flows approach," Labour Economics, Elsevier, vol. 65(C).
    2. Guy Michaels & Ashwini Natraj & John Van Reenen, 2010. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 years," NBER Working Papers 16138, National Bureau of Economic Research, Inc.
    3. Toshie Ikenaga & Ryo Kambayashi, 2016. "Task Polarization in the Japanese Labor Market: Evidence of a Long-Term Trend," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 267-293, April.
    4. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    5. Sergio Scicchitano & Marco Biagetti & Antonio Chirumbolo, 2020. "More insecure and less paid? The effect of perceived job insecurity on wage distribution," Applied Economics, Taylor & Francis Journals, vol. 52(18), pages 1998-2013, April.
    6. David H. Autor & Michael J. Handel, 2013. "Putting Tasks to the Test: Human Capital, Job Tasks, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 59-96.
    7. Rafael Muñoz de Bustillo Llorente & Sudipa Sarkar & Raquel Sebastian & Jose-Ignacio Antón, 2018. "Educational mismatch in Europe at the turn of the century: Measurement, intensity and evolution," International Journal of Manpower, Emerald Group Publishing, vol. 39(8), pages 977-995, November.
    8. Guido Matias Cortes, 2016. "Where Have the Middle-Wage Workers Gone? A Study of Polarization Using Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 63-105.
    9. Cirillo, Valeria & Evangelista, Rinaldo & Guarascio, Dario & Sostero, Matteo, 2021. "Digitalization, routineness and employment: An exploration on Italian task-based data," Research Policy, Elsevier, vol. 50(7).
    10. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    11. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1055-1089.
    12. Francis Green & Yu Zhu, 2010. "Overqualification, job dissatisfaction, and increasing dispersion in the returns to graduate education," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 740-763, October.
    13. Dengler, Katharina & Matthes, Britta, 2018. "The impacts of digital transformation on the labour market: Substitution potentials of occupations in Germany," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 304-316.
    14. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 235-270, April.
    15. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
    16. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    17. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
    18. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    19. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    20. Ardiana N. Gashi & Geoff Pugh & Nick Adnett, 2010. "Technological change and employer-provided training: evidence from UK workplaces," International Journal of Manpower, Emerald Group Publishing, vol. 31(4), pages 426-448, July.
    21. Matthias Weiss & Alfred Garloff, 2009. "Skill-biased technological change and endogenous benefits: the dynamics of unemployment and wage inequality," Applied Economics, Taylor & Francis Journals, vol. 43(7), pages 811-821.
    22. Boll, Christina & Leppin, Julian & Rossen, Anja & Wolf, André, 2016. "Overeducation - New evidence for 25 European countries," IAB-Discussion Paper 201635, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    23. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    24. Guy Michaels & Ashwini Natraj & John Van Reenen, 2014. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over Twenty-Five Years," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 60-77, March.
    25. Neves, Pedro Cunha & Afonso, Óscar & Sequeira, Tiago Neves, 2018. "Population growth and the wage skill premium," Economic Modelling, Elsevier, vol. 68(C), pages 435-449.
    26. Gaetano Basso, 2020. "The Evolution of the Occupational Structure in Italy, 2007–2017," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(2), pages 673-704, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caselli, Mauro & Fracasso, Andrea & Marcolin, Arianna & Scicchitano, Sergio, 2021. "The reassuring effect of firms' technological innovations on workers' job insecurity," GLO Discussion Paper Series 938, Global Labor Organization (GLO).
    2. Caselli, Mauro & Fracasso, Andrea & Traverso, Silvio, 2021. "Robots and risk of COVID-19 workplace contagion: Evidence from Italy," Technological Forecasting and Social Change, Elsevier, vol. 173(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cavenaile, Laurent, 2021. "Offshoring, computerization, labor market polarization and top income inequality," Journal of Macroeconomics, Elsevier, vol. 69(C).
    2. Peng, Fei & Anwar, Sajid & Kang, Lili, 2017. "New technology and old institutions: An empirical analysis of the skill-biased demand for older workers in Europe," Economic Modelling, Elsevier, vol. 64(C), pages 1-19.
    3. Sebastian Lago Raquel & Federico Biagi, 2018. "The Routine Biased Technical Change hypothesis: a critical review," JRC Working Papers JRC113174, Joint Research Centre (Seville site).
    4. Fonseca, Tiago & Lima, Francisco & Pereira, Sonia C., 2018. "Job polarization, technological change and routinization: Evidence for Portugal," Labour Economics, Elsevier, vol. 51(C), pages 317-339.
    5. Gries, T. & Grundmann, R. & Palnau, I. & Redlin, M., 2015. "Does technological change drive inclusive industrialization? : A review of major concepts and findings," MERIT Working Papers 2015-044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Hemous, David & Olsen, Morten, 2014. "The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality," CEPR Discussion Papers 10244, C.E.P.R. Discussion Papers.
    7. Ariell Reshef, 2013. "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 312-331, April.
    8. Falck, Oliver & Heimisch-Roecker, Alexandra & Wiederhold, Simon, 2021. "Returns to ICT skills," Research Policy, Elsevier, vol. 50(7).
    9. Downey, Mitch, 2021. "Partial automation and the technology-enabled deskilling of routine jobs," Labour Economics, Elsevier, vol. 69(C).
    10. Cortes, Guido Matias & Salvatori, Andrea, 2019. "Delving into the demand side: Changes in workplace specialization and job polarization," Labour Economics, Elsevier, vol. 57(C), pages 164-176.
    11. Ariell Reshef, 2013. "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 312-331, April.
    12. Vallizadeh, Ehsan & Muysken, Joan & Ziesemer, Thomas, 2015. "Offshoring of medium-skill jobs, polarization, and productivity effect : implications for wages and low-skill unemployment," IAB-Discussion Paper 201507, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Florian Brugger & Christian Gehrke, 2017. "The Neoclassical Approach to Induced Technical Change: From Hicks to Acemoglu," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 730-776, November.
    14. Cirillo, Valeria & Evangelista, Rinaldo & Guarascio, Dario & Sostero, Matteo, 2021. "Digitalization, routineness and employment: An exploration on Italian task-based data," Research Policy, Elsevier, vol. 50(7).
    15. Wang, Xiupeng, 2020. "Labor market polarization in Britain and Germany: A cross-national comparison using longitudinal household data," Labour Economics, Elsevier, vol. 65(C).
    16. Harrigan, James & Reshef, Ariell & Toubal, Farid, 2021. "The March of the Techies: Job Polarization Within and Between Firms," Research Policy, Elsevier, vol. 50(7).
    17. Lucas van der Velde, 2017. "Phasing out: routine tasks and retirement," GRAPE Working Papers 23, GRAPE Group for Research in Applied Economics.
    18. Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2015. "Wage Inequality and Firm Growth," NBER Working Papers 20876, National Bureau of Economic Research, Inc.
    19. Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2015. "Wage Inequality and Firm Growth," LIS Working papers 632, LIS Cross-National Data Center in Luxembourg.
    20. Cortes, Guido Matias & Jaimovich, Nir & Siu, Henry E., 2017. "Disappearing routine jobs: Who, how, and why?," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 69-87.

    More about this item

    Keywords

    Blinder/Oaxaca; Counterfactual distribution; Italy; Non-parametric methodology; Quantile regression; Routine; Semi-parametric methodology; Wage inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:763. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/glabode.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/glabode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.