Working Paper: NBER ID: w16138
Authors: Guy Michaels; Ashwini Natraj; John Van Reenen
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.
Keywords: ICT; skill demand; polarization; labor market; education
JEL Codes: J23; J24; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade openness (F43) | polarization (C46) |
| technological advancements (ICT) (O30) | demand for college-educated workers (J24) |
| technological advancements (ICT) (O30) | demand for middle-educated workers (J24) |
| ICT intensity (O30) | demand for highly educated workers (J24) |
| ICT intensity (O30) | demand for middle-educated workers (J24) |