published in: Journal of Economic Behavior and Organization, 2004, 54 (2), 137-151
This paper offers a model to explain how computer technology has changed the labor
market. It demonstrates that wage differentials between computer users and non-users are
consistent with the fact that computers are first introduced in high-wage jobs because of cost
efficiency. Furthermore, skill upgrading occurs because of a reemphasis on non-routine tasks
after computer adoption. The model also reveals that neither differences in computer skills
nor complementary skills are needed to explain wage differentials between computer users
and non-users, skill upgrading, and the changing organization and intensity of work. Finally,
the predicted effects on the wage structure following the diffusion of computers are consistent
with the empirical evidence.
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