A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive

Paul Gaggl · Greg Wright

120 citations0/0 files storedAmerican Economic Journal Applied Economics

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Labor market dynamics and wage inequality Global trade and economics Economic Growth and Development

Abstract

We study the short-run causal effect of Information and Communication Technology (ICT) adoption on employment and wage distribution. We exploit a natural experiment generated by a tax allowance on ICT investments and find that the primary effect of ICT is to complement nonroutine, cognitive-intensive work. We also find that the ICT investments led to organizational changes that were associated with increased inequality within the firm and we discuss our findings in the context of theories of ICT adoption and wage inequality. We find that tasks-based models of technological change best fit the patterns that we observe. (JEL D22, J23, J24, J31, M15, O33)

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References

2003The Skill Content of Recent Technological Change: An Empirical Exploration 1976Econometric policy evaluation: A critique 2013The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market 2002Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence 2001The Skill Content of Recent Technological Change: An Empirical Exploration 2010Skills, Tasks and Technologies: Implications for Employment and Earnings 1998Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality 2002Technical Change, Inequality, and the Labor Market

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