Has ICT Polarized Skill Demand? Evidence from Eleven Countries Over 25 Years

44 Pages Posted: 29 Jun 2010 Last revised: 7 Aug 2010

See all articles by Guy Michaels

Guy Michaels

London School of Economics & Political Science (LSE)

Ashwini Natraj

affiliation not provided to SSRN

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

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Date Written: June 2010

Abstract

OECD labor markets have become more "polarized" with employment in the middle of the skill distribution falling relative to the top and (in recent years) also the bottom of the skill distribution. We test the hypothesis of Autor, Levy, and Murnane (2003) that this is partly due to information and communication technologies (ICT) complementing the analytical tasks primarily performed by highly educated workers and substituting for routine tasks generally performed by middle educated workers (with little effect on low educated workers performing manual non-routine tasks). Using industry level data on the US, Japan, and nine European countries 1980-2004 we find evidence consistent with ICT-based polarization. Industries with faster growth of ICT had greater increases in relative demand for high educated workers and bigger falls in relative demand for middle educated workers. Trade openness is also associated with polarization, but this is not robust to controls for technology (like R&D). Technologies can account for up to a quarter of the growth in demand for the college educated in the quarter century since 1980.

Suggested Citation

Michaels, Guy and Natraj, Ashwini and Van Reenen, John Michael, Has ICT Polarized Skill Demand? Evidence from Eleven Countries Over 25 Years (June 2010). NBER Working Paper No. w16138. Available at SSRN: https://ssrn.com/abstract=1630143

Guy Michaels (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Ashwini Natraj

affiliation not provided to SSRN ( email )

John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Stanford Graduate School of Business ( email )

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Institute for Fiscal Studies (IFS) ( email )

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London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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