Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
This paper develops a theoretical framework that expands the task-based models of technical progress and labor markets to allow for firm heterogeneity and wages that vary across firms. The model is compatible with the empirical observation that mor...
| Main Author: | |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/217701517406450447/Digital-technology-adoption-and-jobs-a-model-of-firm-heterogeneity http://hdl.handle.net/10986/29292 |
| Summary: | This paper develops a theoretical
framework that expands the task-based models of technical
progress and labor markets to allow for firm heterogeneity
and wages that vary across firms. The model is compatible
with the empirical observation that more productive firms
are larger, are more skill intensive, and pay higher wages
across skill categories. The model predicts that the
decision to invest in information and communications
technology depends on firm size and labor market
characteristics. As a result of investment in information
and communications technology firms grow, become more
intensive in complex tasks, become more skilled intensive,
and employ more skilled workers as long as skilled labor is
complementary to information and communications technology.
Employment of unskilled workers increases as well, provided
that firm output growth is sufficiently high to overcome the
negative substitution effect. Workers who remain employed
are better off because their wage increases with information
and communications technology. To the extent that skilled
workers have more bargaining power than unskilled workers,
or that their wage scheme is more tied to firm performance,
wage inequality at the firm level increases with information
and communications technology. |
|---|