Chapter 13 - The impact of information and communications technology investment on employment in Japan and Korea

Abstract

The economic impact of information and communications technology (ICT) investment is visible only with a long time-lag, particularly in the case of employment. There are two contrasting effects of ICT investment on employment: the complementarity relationships between capital and higher skills and the substitutability relationships between capital and lower skills and between the ICT capital intensity and wage rate of unskilled workers. The purpose of this paper is to provide empirical evidence on the impact of the skill-biased technical change associated with ICT investment on labor demand in Japan and Korea. Our estimates of the effect of ICT intensity on the wage share based on Japanese and Korean data are generally consistent with the estimates obtained by O'Mahony et al. (2008) in the sense that we find capital-skill complementarity and technology-skill substitutability during the period 1995–2015.