InsightaaS: Andrew McAfee is well-known as a commentator on the business of, investment trends within, and the social implications resulting from IT. In this post from his “The Business Impact of IT” blog, he provides a fascinating comparison between two papers – one focused on exploring the relationship between employment and skills, and one examining diverging trends in corporate profit and labour expenditures as a proportion of GDP. In both cases, the impact of IT on productivity is central to the authors’ conclusions.
Two papers came out last year that examined important issues around jobs and wages. Both are in top journals. Both were written by first-rate researchers, none of whom specialize in studying the impact of technology. And both came to the same conclusion: that digital technologies were largely responsible for the phenomena they examined.
The first paper, by David Dorn and my MIT colleague David Autor, is about how jobs and wages changed in America from 1980-2005. It was published last year in the American Economic Review and called “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market,” which is an admirably informative title.
Equally admirable are the graphs the authors draw to illustrate their main findings. Here’s the one for jobs (the one for wages has a pretty similar shape). It gives the changes in employment share – which you can think of as changes in the the ‘market share’ of jobs – between 1980 and 2005. And it shows vividly that low-skill and high-skill jobs gained market share over that period, which those in the middle of the skill range lost…