Date of Award

5-2009

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Applied Economics

Advisor

Tamura, Robert F

Committee Member

Mroz , Thomas A.

Committee Member

Simon , Curtis J.

Committee Member

Warner , John T.

Abstract

This thesis is motivated by the question, how does computer-related technological change affect the individual's incentive to acquire specialized knowledge? Specifically, will the impact of technological change be homogeneous for all workers regardless of their idiosyncratic characteristics such as educational attainments or occupation? If not, then how do the heterogeneous effects from advances in computer-related technology change the labor market? Based on the related theoretical frameworks from the literature, Chapter 2 focuses on the empirical implementations of heterogeneous impacts of information and communication technology on between-occupation wage differentials and within-group wage differentials, and Chapter 3 examines the impact of computerization on labor productivity and on demand shifts for different types of skilled workers.
Chapter 2 re-investigates the skill-biased technological change puzzle through a different view of technological change. Garicano (2000) and Garicano and Rossi-Hansberg (2006) separate comprehensive skill-biased technological change into information and communication technological changes, which have qualitatively different characteristics. Based on this distinction, I try to show that advances in information and communication technology raise wage differentials between problem solvers and production workers. In contrast, for within-group wage differentials, information technology has homogeneous positive effects on within-group wage differentials for problem solvers and production workers, while communication technology has a heterogeneous impact on the within wage differentials: a positive effect for problem solvers and a negative effect for production workers. Furthermore, empirical analyses based on wage differentials between four occupational layers provide an important direction for solving the skill-biased technological change puzzle questioned by Card and DiNardo (2002) with different growth rates of information and communication technology.
To explain strong increases in productivity growth across industries in the late 1990s, Chapter 3 suggests that large investments in computer-related capital resulted in the U.S. productivity revival. It also shows that rapid adoption of computer-based assets is a driving force for polarization trends in employment. This is due to heterogeneous demand shifts for different types of skilled workers, accompanied by diverging wage inequality between top-half and bottom-half wage distribution. The implications are based on the theoretical frameworks from Autor, Levy, Murnane (2003) and Autor, Katz, and Kearney (2006) in which (i) price declines in computer-related capital raise relative wages for nonroutine cognitive tasks and nonroutine manual tasks to routine tasks. Thus, middle workers for routine tasks increase their labor supply toward nonroutine cognitive tasks and nonroutine manual tasks through a self-selection process. And (ii) since demand for routine tasks are increased due to cheaper computerization costs, routine tasks, which were performed by middle-skilled workers, are carried out by computer-related capital. Empirical applications in Chapter 3 provide evidence for increasing demand shifts of high-skilled workers and low-skilled workers with the U.S. productivity gains and decreasing demand shifts for middle-skilled workers due to increasing investment for computerization as predicted in the theoretical framework.

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