Information Technology Skills and Labor Market Outcomes for Workers
44 Pages Posted: 14 Nov 2011 Last revised: 10 Dec 2019
Date Written: October 10, 2013
Job erosion is a major social concern globally. Unemployment and low wages remain pressing societal challenges in the wake of increased automation, especially for traditionally disadvantaged groups in the labor market, such as women and the elderly. However, workers who possess relevant IT skills might benefit in an increasingly digital economy. In this study, we examine the role of IT skills in labor market outcomes for workers. We leverage a household IT use survey from an emerging economy that captures detailed, individual-level data on IT skills and IT use, which we also integrate with household labor force survey data on workers’ wages, occupations, and industries between 2007–2015. We find that basic IT skills increase employment probability, whereas advanced IT skills are not significantly associated with higher employment, controlling for basic skills. These effects on employment can be explained by both increased labor force participation and a higher probability of transitioning from unemployment to employment, after accounting for the increased participation in the workforce. We analyze wages at the labor cohort-level and find advanced IT skills to be associated with higher wages, indicating that they can increase job productivity. Interestingly, the effects of basic IT skills on employment are significantly larger for the female and older workforce that has a higher preference for flexible work options. Additionally, IT skills complement occupations that have a higher share of non-routine tasks that cannot be performed by pre-defined rules. These results emphasize the importance of providing necessary IT access and basic training to socially disadvantaged groups to close the digital divide and IT skills gap. We contribute to the IS literature by providing evidence on the entire labor force of workers across occupations and demographics, going beyond IT professionals and employed workers who are predominantly studied in the literature. We discuss managerial and public policy implications for designing IT training policies for individuals, organizations, and nations to stimulate employment with higher wages for workers, particularly for underserved segments of the workforce, by helping them obtain occupation-relevant IT skills.
Keywords: IT skills, IT use, General-purpose skills, Employment, Wages, Labor market outcomes
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