How Demand for New Skills Affects Wage Inequality: The Case of Software Programmers

Gustavo de Souza, Jacob S. Herbstman and Jack Mannion
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Jack Mannion: https://www.chicagofed.org/people/m/mannion-jack

No WP 2024-19, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: We study how the demand for programming skills has impacted inequality. We create a new dataset with information on wages, employment, and software of Brazilian programmers, covering the period from the birth of information technology (IT) to the rise of artificial intelligence (AI). High-ability, high-wage, and highly educated individuals in key technology hubs are more likely to become programmers. Creating software boosts both wages and career prospects of programmers, especially for those with specialized skills in AI and cybersecurity. These wage gains are concentrated among top programmers, increasing inequality within the profession. Therefore, increased demand for specialized skills in programming has contributed to wage inequality both within the programming field and between programmers and other occupations.

Keywords: technological progress; AI; software (search for similar items in EconPapers)
JEL-codes: J23 J24 O33 (search for similar items in EconPapers)
Pages: 43
Date: 2024-09-30
New Economics Papers: this item is included in nep-ain, nep-ict, nep-lma and nep-tid
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DOI: 10.21033/wp-2024-19

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