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The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany

Author

Listed:
  • Genz Sabrina

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Janser Markus

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Lehmer Florian

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

The strong rise of digitalization, automation, machine learning and other related new digital technologies has led to an intense debate about their societal impacts. The transitions of occupations and the effects on labor demand and workers’ wages are still open questions. Research projects dealing with this issue often face a lack of data on the usage of new digital technologies. This paper uses a novel linked employer–employee data set that contains detailed information on establishments’ technological upgrading between 2011 and 2016, a recent period of rapid technological progress. Furthermore, we are the first to develop a digital tools index based on the German expert database BERUFENET. The new index contains detailed information on the work equipment that is used by workers. Hence, we observe the degree of digitalization on both the establishment level and the worker level. The data allow us to investigate the impact of technology investments on the wage growth of employees within establishments. Overall, the results from individual level fixed effects estimates suggest that investments in new digital technologies at the establishment level positively affect the wages of the establishments’ workers. Sector-specific results show that investments in new digital technologies increase wages in knowledge intensive production establishments and non-knowledge intensive services. The wage growth effects of employees in digital pioneer establishments relative to the specific reference group of workers in digital latecomer establishments are most pronounced for low- and medium-skilled workers.

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  • Genz Sabrina & Janser Markus & Lehmer Florian, 2019. "The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 483-521, June.
    • Handle: RePEc:jns:jbstat:v:239:y:2019:i:3:p:483-521:n:2
    DOI: 10.1515/jbnst-2017-0161
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    References listed on IDEAS

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    Cited by:

    1. Genz Sabrina & Bellmann Lutz & Matthes Britta, 2019. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies? : First Evidence from the IAB-Establishment Panel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 523-564, June.
    2. Genz, Sabrina & Schnabel, Claus, 2021. "Digging into the Digital Divide: Workers' Exposure to Digitalization and Its Consequences for Individual Employment," IZA Discussion Papers 14649, Institute of Labor Economics (IZA).
    3. Annie Tubadji & Toby Denney & Don J. Webber, 2021. "Cultural relativity in consumers' rates of adoption of artificial intelligence," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1234-1251, July.
    4. Friedrich, Teresa Sophie & Laible, Marie-Christine & Pollak, Reinhard & Schongen, Sebastian & Schulz, Benjamin & Vicari, Basha, 2021. "Grasping Digitalization in the Working World: An Example From the German National Educational Panel Study [Die Erfassung von Digitalisierung in der Arbeitswelt: Ein Beispiel aus dem Nationalen Bild," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 72(4), pages 415-452.
    5. Janser, Markus, 2018. "The greening of jobs in Germany : First evidence from a text mining based index and employment register data," IAB-Discussion Paper 201814, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    digital technologies; automation; digital tools; wage growth;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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