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...

Full description

Bibliographic Details
Main Author: Brambilla, Irene
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
id okr-10986-29292
recordtype oai_dc
spelling okr-10986-292922021-06-08T14:42:48Z Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity Brambilla, Irene ICT JOBS TECHNOLOGY ADOPTION FIRM HETEROGENEITY FIRM PRODUCTIVITY INFORMATION AND COMMUNICATION TECHNOLOGY LABOR MARKET SKILLED LABOR WAGE GAP INEQUALITY 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. 2018-01-31T20:44:47Z 2018-01-31T20:44:47Z 2018-01 Working Paper http://documents.worldbank.org/curated/en/217701517406450447/Digital-technology-adoption-and-jobs-a-model-of-firm-heterogeneity http://hdl.handle.net/10986/29292 English Policy Research Working Paper;No. 8326 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ICT
JOBS
TECHNOLOGY ADOPTION
FIRM HETEROGENEITY
FIRM PRODUCTIVITY
INFORMATION AND COMMUNICATION TECHNOLOGY
LABOR MARKET
SKILLED LABOR
WAGE GAP
INEQUALITY
spellingShingle ICT
JOBS
TECHNOLOGY ADOPTION
FIRM HETEROGENEITY
FIRM PRODUCTIVITY
INFORMATION AND COMMUNICATION TECHNOLOGY
LABOR MARKET
SKILLED LABOR
WAGE GAP
INEQUALITY
Brambilla, Irene
Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
relation Policy Research Working Paper;No. 8326
description 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.
format Working Paper
author Brambilla, Irene
author_facet Brambilla, Irene
author_sort Brambilla, Irene
title Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
title_short Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
title_full Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
title_fullStr Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
title_full_unstemmed Digital Technology Adoption and Jobs : A Model of Firm Heterogeneity
title_sort digital technology adoption and jobs : a model of firm heterogeneity
publisher World Bank, Washington, DC
publishDate 2018
url http://documents.worldbank.org/curated/en/217701517406450447/Digital-technology-adoption-and-jobs-a-model-of-firm-heterogeneity
http://hdl.handle.net/10986/29292
_version_ 1764468979533873152