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ICT capital–skill complementarity and wage inequality: Evidence from OECD countries

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  • Taniguchi, Hiroya
  • Yamada, Ken

Abstract

Although wage inequality has evolved in advanced countries over recent decades, it remains unknown the extent to which changes in wage inequality and their differences across countries are attributable to specific capital and labor quantities. We examine this issue by estimating a sector-level production function extended to allow for capital–skill complementarity and factor-biased technological change using cross-country and cross-industry panel data. Our results indicate that most of the changes in the skill premium are attributable to the relative quantities of ICT equipment, skilled labor, and unskilled labor in the goods and service sectors of the majority of advanced countries.

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  • Taniguchi, Hiroya & Yamada, Ken, 2022. "ICT capital–skill complementarity and wage inequality: Evidence from OECD countries," Labour Economics, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:labeco:v:76:y:2022:i:c:s0927537122000446
    DOI: 10.1016/j.labeco.2022.102151
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    Cited by:

    1. Erik Brynjolfsson & Danielle Li & Lindsey R. Raymond, 2023. "Generative AI at Work," NBER Working Papers 31161, National Bureau of Economic Research, Inc.
    2. Albinowski, Maciej & Lewandowski, Piotr, 2024. "The impact of ICT and robots on labour market outcomes of demographic groups in Europe," Labour Economics, Elsevier, vol. 87(C).
    3. Juzhong Zhuang, 2023. "Income and Wealth Inequality in Asia and the Pacific: Trends, Causes, and Policy Remedies," Asian Economic Policy Review, Japan Center for Economic Research, vol. 18(1), pages 15-41, January.
    4. A. A. Ternikov, 2023. "Artificial intelligence and the demand for skills in Russia," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.

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    More about this item

    Keywords

    Skill premium; Capital-skill complementarity; Technological change; Information and communication technology (ICT); Production function;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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