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The new wave? The role of human capital and STEM skills in technology adoption in the UK

Author

Listed:
  • Draca, Mirko
  • Nathan, Max
  • Nguyen, Viet Nguyen-Tien
  • Oliveira Cunha, Juliana
  • Rosso, Anna
  • Sivropoulos-Valero, Anna Valero

Abstract

Which types of human capital influence the adoption of advanced technologies? We study the skill biased adoption of information and communication technologies (ICT) across two waves in the UK. Specifically, we compare the 'new wave' of cloud and machine learning / AI technologies during the 2010s - pre-LLM - with the previous wave of personal computer adoption in the 1990s and early 2000s. At the area-level we see the emergence of a distinct STEM-biased adoption effect for the second wave of cloud and machine learning / AI technologies (ML/AI), alongside a general skill-biased effect. A one-standard deviation increase in the baseline share of STEM workers in areas is associated with around 0.3 of a standard deviation higher adoption of cloud and ML/AI. We find similar effects at the firm level where we are able to test for the influence of a wide range of skills. In turn, this STEM-biased adoption pattern has encouraged the concentration of these technologies, leading to more acute differences between high-tech and low-tech areas and firms. In contrast with classical technology diffusion, recent cloud and ML/AI adoption in the UK seems more likely to widen inequalities than reduce them.

Suggested Citation

  • Draca, Mirko & Nathan, Max & Nguyen, Viet Nguyen-Tien & Oliveira Cunha, Juliana & Rosso, Anna & Sivropoulos-Valero, Anna Valero, 2024. "The new wave? The role of human capital and STEM skills in technology adoption in the UK," LSE Research Online Documents on Economics 126769, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126769
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    More about this item

    Keywords

    technology diffusion; ICT; human capital; stem; technological change; AI;
    All these keywords.

    JEL classification:

    • 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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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