Evidence Of Technological Change :: essays research papers

The early evidence on the importance of technological changes a source of the shifts in the relative demand for different types of labor during the 1980s came from case studies. The Bureau of labor Statistics conducted several case studies of the effects of changes in production processes in particular industries (Mark, 1987). In an industry that experienced a significant change in technology, the usual pattern was a dramatic reduction in the employment of production workers with an increase or no change in the number of skilled workers in that industry. More recently there have been several econometric analyses of the effects of variables like the (appropriately lagged) rate of investment in computers and/ or other forms of â€Å"information capital† and the ratio of expenditures on research and development to sales on changes in the skill composition of industries (for examples, Berman, Bound and Griliches, 1994). The results of these studies are consistent with those of the case studies and the hypotheses that the recent technological change has shifted the relative demand for skilled labor to the right.   Ã‚  Ã‚  Ã‚  Ã‚  Changes in production techniques have widened across the country quickly, especially the multinational firms. Thus, if technological change is an important determinant of relative demand shifts, one would expect to observe patterns in other industrialized countries similar to those in the United States. Some of the recent studies report results for a variety of old industrialized (OECD) countries that are indeed consistent with the U.S. results (Collechia and Papaconstantinou, 1996; Machin, Ryan and Van Reenan, 1996). These countries vary a great deal with respect to changes in their situations with respect to trade, labor market institutions (like the importance of trade unions), and unemployment. Obviously, the relative demand for skilled labor in each of them is rising rapidly. In my view, it is the fairly strong evidence in favor of the wage inequality and technological change story.   Ã‚  Ã‚  Ã‚  Ã‚  A factor that is often cited as the specific issue of the post-1980 is the widespread adoption of computer technology throughout the economy. As mentioned above, the rate of skilled labor has tended to be greatest in those industries with the highest rate of investment in computers. There is also evidence that workers who use computers on the job have, other things constant, higher earnings than those who do not (Krueger, 1993). In my view, it is probably too early to determine that how much of the technological change dues to computers affect wage inequality, but we will know more about the answer to this question in 20 years.