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Computing Inequality: Have Computers Changed the Labor Market?

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Author Info
David H. Autor
Lawrence F. Katz
Alan B. Krueger

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Abstract

This paper examines the effect of technological change and other factors on the relative demand for workers with different education levels and on the recent growth of U.S. educational wage differentials. A simple supply-demand framework is used to interpret changes in the relative quantities, wages, and wage bill shares of workers by education in the aggregate U.S. labor market in each decade since 1940 and from 1990 to 1995. The results suggest that the relative demand for college graduates grew more rapidly on average during the past 25 years (1970-95) than during the previous three decades (1940-70). The increased rate of growth of relative demand for college graduates beginning in the 1970s did not lead to an increase in the college/high school wage diffe- rential until the 1980s because the growth in the supply of college graduates increased even more sharply in the 1970s before returning to historical levels in the 1980s. The acceleration in demand shifts for more-skilled workers in the 1970s and 1980s relative to the 1960s is entirely accounted for by an increase in within-industry changes in skill utilization rather than between- industry employment shifts. Industries with large increases in the rate of skill upgrading in the 1970s and 1980s versus the 1960s are those with greater growth in employee computer usage, more computer capital per worker and larger investment as a share of total investment. The results suggest that the spread of computer technology may `explain' as much as 30-50% of the increase in the rate of growth of the relative demand for more-skilled workers since 1970.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5956.

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Date of creation: Mar 1997
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Handle: RePEc:nbr:nberwo:5956

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References listed on IDEAS
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  2. Robert C. Feenstra, 1996. "U.S. Imports, 1972-1994: Data and Concordances," NBER Working Papers 5515, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February. [Downloadable!] (restricted)
  4. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February. [Downloadable!] (restricted)
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  6. Goldin, Claudia & Katz, Lawrence F, 1996. "Technology, Skill, and the Wage Structure: Insights from the Past," American Economic Review, American Economic Association, vol. 86(2), pages 252-57, May. [Downloadable!] (restricted)
  7. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February. [Downloadable!] (restricted)
  8. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Borjas, George J & Ramey, Valerie A, 1995. "Foreign Competition, Market Power, and Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1075-1110, November. [Downloadable!] (restricted)
  10. Stephen Machin & Annette Ryan & John Van Reenen, 1996. "Technology and changes in skill structure: Evidence from an international panel of industries," IFS Working Papers W96/06, Institute for Fiscal Studies.
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  11. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
  12. Levy, Frank & Murnane, Richard J, 1996. "With What Skills Are Computers a Complement?," American Economic Review, American Economic Association, vol. 86(2), pages 258-62, May. [Downloadable!] (restricted)
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  15. Berndt, Ernst R. & Morrison, Catherine J. & Rosenblum, Larry S., 1992. "High-tech capital formation and labor composition in U.S. manufacturing industries : an exploratory analysis," Working papers 3414-92., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
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  16. Stephen Machin & A Ryan & John Van Reenen, 1996. "Technology and Changes in Skill Structure: Evidence from an International Panel of Industries," CEP Discussion Papers dp0297, Centre for Economic Performance, LSE.
  17. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  22. Jaeger, David A, 1997. "Reconciling the Old and New Census Bureau Education Questions: Recommendations for Researchers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 300-309, July.
  23. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December. [Downloadable!] (restricted)
  24. Berndt, Ernst R. & Morrison, Catherine J., 1992. "High-tech capital formation and economic performance in U.S. manufacturing industries : an exploratory analysis," Working papers 3419-92., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
    Other versions:
  25. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 291-303, February.
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  26. Jin Huem Park, 1994. "Estimation of Sheepskin Effects and Returns to Schooling Using he Old and the New CPS Measures of Educational Attainment," Working Papers 717, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  27. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  28. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
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