Abstract

This paper uses a panel of firms from the Mexican Economic Censuses and analyzes at the microeconomic level how labor markets adapt to the adoption of information and communication technologies. The paper studies the effects of the adoption of information and communication technologies over the labor structure of the firm and wages. Thus, it assesses whether increasing the use of information and communication technologies leads to an increasing demand for skilled relative to low-skilled labor, and, thus, analyzes its effects on the wage gap between the two groups. The results of this analysis show that there is indeed an effect of the adoption of information and communication technologies over the demand for higher-skilled workers. However, for the manufacturing and services sectors, instead of increasing the wage gap between skilled and unskilled workers, the wage gap decreases. The results for the manufacturing sector appear to be driven by an increasing sophistication of blue-collar workers due to the organizational adjustments derived from the adoption of information and communication technologies.

Highlights

  • In recent years, the effect of ICT adoption over firm-level productivity has been widely studied and there appears to be consensus about the importance of ICT for firms’ performance (Syverson, 2011)

  • The small set of papers that have studied the impact of exogenous shocks on wages and labor demand in the case of Mexico have focused on the effects of its trade opening process, which according to the predictions of theoretical trade models should have decreased the wage gap between unskilled workers and skilled workers considering that Mexico attracted production processes that are intensive in low-skilled labor

  • A recent theoretical study by Brambilla (2016) extends this task framework by allowing for firm heterogeneity and differences in wages across firms. This model predicts that as a result of ICT adoption, firms become more specialized in complex tasks and substitute unskilled workers, which is in line with Skill-Biased Technical Change (SBTC) models, while the share of skilled workers increases as they are complements of ICT

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Summary

Introduction

The effect of ICT adoption over firm-level productivity has been widely studied and there appears to be consensus about the importance of ICT for firms’ performance (Syverson, 2011). The small set of papers that have studied the impact of exogenous shocks on wages and labor demand in the case of Mexico have focused on the effects of its trade opening process, which according to the predictions of theoretical trade models should have decreased the wage gap between unskilled workers and skilled workers considering that Mexico attracted production processes that are intensive in low-skilled labor. These effects were not observed during the first decade after the North American Free Trade Agreement’s (NAFTA) entry into force, which has been the most important milestone of this process.

Literature Review
Empirical studies of wage inequality for Mexico
Modeling strategy
Instrumental variables
Data and Descriptive Statistics
Firm-level ICT use
Labor and wages
Descriptive Statistics
Manufacturing
Services and commerce
ICT use and TFP
ICT use and other firm-level outcomes
Robustness tests
Heterogeneity of results by sales-per-worker increases
Mechanisms through which ICT use could affect skill-labor composition within the firm
Conclusions
Full Text
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