How computerization has changed the labour market: A review of the evidence and a new perspective

Abstract

The use of computer technology at work has increased dramatically over the past decades from about 20 per cent in the early 1980s to more than 70 per cent at the beginning of the new millennium. This increase in the adoption and use of new technology is likely to have changed the labour market in many dimensions.1 With respect to wages it has been found that computer users earn substantially higher wages than non-users, with wage premiums up to levels as high as 20 per cent. It is however not clear whether this observed premium is a reflection of the returns to (computer) skills, the result of unobserved heterogeneity between computer users and non-users, or whether there are other sources underlying these wage differentials.2 Computer technology is particularly used by the more highly educated workers, suggesting skill advantages play a crucial role in adjusting to and using new technologies. Hence, adoption of computer technology is easily connected to changes in the wage structure. On the other hand, looking at the present use of computer technology, it is hard to understand why more highly educated workers have an advantage in using for example a PC compared with less highly educated workers. Related to this observation is the