What Happens When Agent T Gets a Computer? The Labor Market Impact of Cost Efficient Computer Adoption

Lex Borghans and Bas ter Weel

No 792, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper offers a model to explain how computer technology has changed the labor market. It demonstrates that wage differentials between computer users and non-users are consistent with the fact that computers are first introduced in high-wage jobs because of cost efficiency. Furthermore, skill upgrading occurs because of a reemphasis on non-routine tasks after computer adoption. The model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between computer users and non-users, skill upgrading, and the changing organization and intensity of work. Finally, the predicted effects on the wage structure following the diffusion of computers are consistent with the empirical evidence.

Keywords: wage differentials by skill; computer use and skill (search for similar items in EconPapers)
JEL-codes: J30 J31 O33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2003-06
New Economics Papers: this item is included in nep-ino
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Published - published in: Journal of Economic Behavior and Organization, 2004, 54 (2), 137-151

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Journal Article: What happens when agent T gets a computer?: The labor market impact of cost efficient computer adoption (2004)
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