The Economics of the Digital Society

The Economics of the Digital Society

Edited by Luc Soete and Bas ter Weel

This important book presents a unique body of research into the economics of the digital society. It questions how modern economies have been transformed as a result of digital goods and markets, and explores the policy implications and challenges of this revolution.

Chapter 10: How computerization has changed the labour market: A review of the evidence and a new perspective

Lex Borghans and Bas ter Weel

Subjects: business and management, knowledge management, innovation and technology, knowledge management, technology and ict


* Lex Borghans and Bas ter Weel 10.1 INTRODUCTION The use of computer technology at work has increased dramatically over the past decades from about 20 per cent in the early 1980s to more than 70 per cent at the beginning of the new millennium. This increase in the adoption and use of new technology is likely to have changed the labour market in many dimensions.1 With respect to wages it has been found that computer users earn substantially higher wages than non-users, with wage premiums up to levels as high as 20 per cent. It is however not clear whether this observed premium is a reflection of the returns to (computer) skills, the result of unobserved heterogeneity between computer users and non-users, or whether there are other sources underlying these wage differentials.2 Computer technology is particularly used by the more highly educated workers, suggesting skill advantages play a crucial role in adjusting to and using new technologies. Hence, adoption of computer technology is easily connected to changes in the wage structure. On the other hand, looking at the present use of computer technology, it is hard to understand why more highly educated workers have an advantage in using for example a PC compared with less highly educated workers. Related to this observation is the * The chapter has benefited from discussions with Daron Acemoglu, Joshua Angrist, David Autor, Eli Berman, Harrie Borghans, Allard Bruinshoofd, David Card, Andries de Grip, Hans Heijke, Hugo Hollanders, Lawrence Katz, Francis Kramarz, Alan...

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