Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure

Lex Borghans and Bas ter Weel

Journal of Income Distribution, 2008, vol. 17, issue 3-4, 37-70

Abstract: We review the empirical literature about the implications of the computerization of the labor market to see whether it can explain observed computer adoption patterns and (long-term) changes in the wage structure. Evidence from empirical micro-economic studies turns out to be inconsistent with macro-economic studies that are based on Constant Elasticity of Substitution (CES) production functions. We propose a micro-economic foundation for the CES production function that allows for changes in the underlying structure. We adapt the macro-economic model by incorporating computer skills, complementary skills, and fixed costs for computer technology usage suggested by the micro-economics literature. It turns out that fixed costs for computer technology usage explain different patterns of computer adoption and diffusion between several types of workers and countries; they also provide very plausible patterns of the timing of wage inequality and technological developments over time.

Keywords: wage level of structure; computer technology; technology diffusion (search for similar items in EconPapers)
JEL-codes: J31 O15 O33 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Understanding the technoloy of computer technology diffusion: explaining computer adoption patterns and implications for the wage structure (2009)
Working Paper: Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure (2008)
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