Computers and Labour Markets: International Evidence

The rapid diffusion of computers has widely changed the consequences of computer use on the labour market. While at the beginning of the eighties knowledge of computers was an obvious advantage in a career, this same knowledge is now so commonplace that the inability to use these tools is widely seen in many industries as a professional handicap. In relation to such drastic transformations, changes in the North American wage structure during the eighties in favour of the better educated have been interpreted by many analysts as evidence of skill-biased technical change. Evidence outside the US, and in particular in Europe, seems to support the idea that similar transformations affected most other labour markets. In this study, we review the empirical evidence on the relation between computer use and labour market outcomes. More precisely, we examine the relation between the broadening use of computers on one side, and wages, skill-composition of the workforce and unemployment on the other. All evidence presented seems to point to the following conclusion: Something is going on, but there is no reason to call it skill-biased technical change in its simplest acceptance. Why should we otherwise observe such different trends in the United States and in Europe? The computer is used everywhere in the developed countries, and the diffusion rates are roughly equal. Furthermore, the machines and softwares used are increasingly similar and delivered simultaneously. Hence, if trends on the various labour markets are caused mostly by technical change, these trends should also be very similar. This does not seem to be what is happening in the Western world. Institutions with both classical supply and demand factors should be able to explain a large fraction of the observed facts. Moreover, it also seems apparent that what matters in a period of rapid diffusion of computers is interpersonal skills; such skills are complements to computer use. Indeed, more research should be devoted to the study of the internal organization of the firm in a highly computerized environment.