nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2013‒11‒02
three papers chosen by
Walter Frisch
University Vienna

  1. The Skill Complementarity of Broadband Internet By Akerman, Anders; Gaarder, Ingvil; Mogstad, Magne
  2. ICT-induced Technological Progress and Employment: A Literature Review By Anna Sabadash

  1. By: Akerman, Anders (Dept. of Economics, Stockholm University); Gaarder, Ingvil (European University Institute); Mogstad, Magne (University College London & Statistics Norway)
    Abstract: Does adoption of broadband internet in firms enhance labor productivity and increase wages? And is this technological change skill biased or factor neutral? We exploit rich Norwegian data with firm-level information on value added, factor inputs and broadband adoption to answer these questions. We estimate production functions where firms can change their technology by adopting broadband internet. A public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation of broadband adoption in firms. This enables us to address endogeneity of broadband adoption and examine how it shifts the production technology and changes the productivity and labor outcomes of different types of workers. We find that broadband adoption favors skilled labor by increasing its relative productivity. The increase in productivity of skilled labor is especially large for college graduates in fields such as science, technology, engineering and business. By comparison, broadband internet is a substitute for workers without high school diploma, lowering their marginal productivity. Consistent with the estimated changes in labor productivity, wage regressions show the expansion of broadband internet improves (worsens) the labor outcomes of skilled (unskilled) workers. We explore several possible explanations for the skill bias of broadband internet. We find suggestive evidence that broadband internet complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. When we use our production function estimates to construct measures of firm level productivity, we find that broadband internet accounts for a few percent of the standard deviation in total factor productivity across firms. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.
    Keywords: Broadband internet; labor productivity; tasks; technological change; skill bias
    JEL: J23 J24 J31 O33
    Date: 2013–10–24
  2. By: Anna Sabadash (European Commission – JRC - IPTS)
    Abstract: This report surveys the literature on the employment impact of ICT. Two competing views - compensation and substitution theory - dominate the current economic debate. The first assumes that the labour-saving impact of technological progress is counterbalanced by various compensation mechanisms. The second asserts that technology cause job displacement, leading to polarization, de-skilling and possibly a jobless economy. Recent employment trends are often seen as indicative of mismatches between rapidly changing demand for skills and slow adjustment in the supply. Despite a wealth of theoretical models and empirical evidence, a consensus regarding the employment effect of ICT remains elusive. While there are many empirical studies on technological progress in general, few are based on specific ICT indicators. Our review devotes equal space to each mainstream economic theory on the complex connection between technology and employment, while giving greater emphasis to those studies which specifically look at ICT and that provide empirical support to sound theoretical grounds. This report recommends further empirical research on the specific employment impact of ICT.
    Keywords: ICT, technological progress, innovation, employment, skills, occupations
    JEL: E24 J21 J23 O33
    Date: 2013–10
  3. By: Shenle Pan (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Michele Nigrelli (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Eric Ballot (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Rochdi Sarraj (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Classical supply chain design relies on a hierarchical organization to store and distribute products over a given geographical area. Within this framework a shortage in a stock affects the whole downstream of the supply chain regardless of the inventory kept in others locations. Within the Physical Internet approach, inventories are distributed in hubs towards the market and source substitution is allowed. The Physical Internet aims to integrate logistics networks into a universal system of interconnected services through the development of protocols and standards for the routing of smart containers of various sizes. This organization enables a distributed storage of goods in hubs thanks to containerization, thus the feasibility of multi-sourcing to one ordering point. This contribution measures the impact of such an organization on stock levels and inventory costs with service level set as a constraint. The analysis focuses on the resources levels (transportation and inventory) needed by the current supply model and by the Physical Internet in order to serve a market with a (Q,R) stock policy. Starting with two supply models and with the definition of cost models as well as inventory policy, the work is based on computer simulation. The analysis tested 3 different families of criterion in order to select dynamically the source when an order is requested: Source Substitution, Minimum Ratio and Minimum Sum. The source substitution, one of the simplest, was found the more efficient and stable according to different scenarios.
    Keywords: Alternative supply sources, Physical Internet, inventory, supply chain
    Date: 2013–10–16

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