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

27 Pages Posted: 24 Jul 2003

See all articles by Lex Borghans

Lex Borghans

Maastricht University - Department of Economics; University of Maastricht - Research Centre for Education and the Labour Market (ROA); IZA Institute of Labor Economics

Bas ter Weel

University of Amsterdam - SEO Economic Research; Institute for the Study of Labor (IZA)

Date Written: June 2003

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

JEL Classification: J30, J31, O33

Suggested Citation

Borghans, Lex and ter Weel, Bas, What Happens When Agent T Gets a Computer? The Labor Market Impact of Cost Efficient Computer Adoption (June 2003). Available at SSRN: https://ssrn.com/abstract=418640

Lex Borghans (Contact Author)

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

University of Maastricht - Research Centre for Education and the Labour Market (ROA) ( email )

P.O. Box 616
Maastricht, MD6200
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Bas Ter Weel

University of Amsterdam - SEO Economic Research ( email )

Roetersstraat 29
Amsterdam, 1018 WB
Netherlands

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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