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Abstract

Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.


Highlights:

  • We propose a task-based index of information technology, defined at the occupational level.
  • We document significant growth in the share of IT intensive jobs and quantify the earnings premium of IT intensive jobs.
  • Higher IT intensity at the occupation level is associated with declines in manufacturing employment.
  • We estimate an elasticity of substitution between IT and non-IT jobs of 1.6 in manufacturing and 1.3 in services.
  • Occupation-level IT intensity is positively associated with output and productivity growth, especially in the services sector.

Information technology, Productivity, Skill premia, Structural change, Tasks

E23, E24, O14, O32