New Digital Technologies and Heterogeneous Employment and Wage Dynamics in the United States: Evidence from Individual-Level Data

Frank Fossen and Alina Sorgner

No 12242, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate heterogeneous effects of new digital technologies on the individual-level employment- and wage dynamics in the U.S. labor market in the period from 2011-2018. We employ three measures that reflect different aspects of impacts of new digital technologies on occupations. The first measure, as developed by Frey and Osborne (2017), assesses the computerization risk of occupations, the second measure, developed by Felten et al. (2018), provides an estimate of recent advances in artificial intelligence (AI), and the third measure assesses the suitability of occupations for machine learning (Brynjolfsson et al., 2018), which is a subfield of AI. Our empirical analysis is based on large representative panel data, the matched monthly Current Population Survey (CPS) and its Annual Social and Economic Supplement (ASEC). The results suggest that the effects of new digital technologies on employment stability and wage growth are already observable at the individual level. High computerization risk is associated with a high likelihood of switching one's occupation or becoming non-employed, as well as a decrease in wage growth. However, advances in AI are likely to improve an individual's job stability and wage growth. We further document that the effects are heterogeneous. In particular, individuals with high levels of formal education and older workers are most affected by new digital technologies.

Keywords: digitalization; artificial intelligence; machine learning; employment stability; unemployment; wage dynamics (search for similar items in EconPapers)
JEL-codes: J22 J23 O33 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2019-03
New Economics Papers: this item is included in nep-big, nep-cmp, nep-ict, nep-lma and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published - revised version published in: Technological Forecasting and Social Change, 2022, 175, 121381

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