The Changing Economics of Knowledge Production
41 Pages Posted: 1 May 2020 Last revised: 15 Jun 2021
Date Written: April 6, 2020
Big data technologies change the way in which data and human labor combine to create knowledge. Is this a modest technological advance or a data revolution? Using hiring and wage data from the investment management sector, we estimate firms' data stocks and the shape of their knowledge production functions. Knowing how much production functions have changed informs us about the likely long-run changes in output, in factor shares, and in the distribution of income, due to the new, big data technologies. Using data from the investment management industry, our results suggest that the labor share of income in knowledge work may fall from 29% to 21%. The change associated with big data technologies is two-thirds of the magnitude of the change brought on by the industrial revolution.
Keywords: FinTech, Machine Learning, Artificial Intelligence, Big Data, Labor Share, Investment Management
JEL Classification: E23, E25, G10, G23
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