A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive

43 Pages Posted: 1 Aug 2014 Last revised: 17 Sep 2016

See all articles by Paul Gaggl

Paul Gaggl

University of North Carolina at Charlotte, Belk College of Business, Department of Economics

Greg C Wright

University of California, Merced

Date Written: August 16, 2016

Abstract

We study the short-run, causal effect of Information and Communication Technology (ICT) adoption on the employment and wage distribution. We exploit a natural experiment generated by a tax allowance on ICT investments and find that the primary effect of ICT is to complement non-routine, cognitive-intensive work. We also find that the ICT investments led to organizational changes that were associated with increased inequality within the firm and we discuss our findings in the context of theories of ICT adoption and wage inequality. We find that tasks-based models of technological change best fit the patterns that we observe.

Keywords: ICT, job polarization, wage inequality, skill-biased technical change, organizational change, tax incentive

JEL Classification: J24, J31, J82, O33

Suggested Citation

Gaggl, Paul and Wright, Greg C, A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive (August 16, 2016). Available at SSRN: https://ssrn.com/abstract=2474281 or http://dx.doi.org/10.2139/ssrn.2474281

Paul Gaggl (Contact Author)

University of North Carolina at Charlotte, Belk College of Business, Department of Economics ( email )

9201 University City Blvd
Charlotte, NC 28223
United States

Greg C Wright

University of California, Merced ( email )

P.O. Box 2039
Merced, CA 95344
United States

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