Structural transformation and the rise of information technology

Giovanni Gallipoli () and Christos Makridis

Journal of Monetary Economics, 2018, vol. 97, issue C, 91-110

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 and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and 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 intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.

Keywords: Information technology; Productivity; Skill premia; Structural change; Tasks (search for similar items in EconPapers)
JEL-codes: E23 E24 O14 O32 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Working Paper: Structural Transformation and the Rise of Information Technology (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:97:y:2018:i:c:p:91-110

DOI: 10.1016/j.jmoneco.2018.05.005

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