Periodic Reporting for period 4 - CBTC (The Resurgence in Wage Inequality and Technological Change: A New Approach)
Berichtszeitraum: 2021-03-01 bis 2021-08-31
Social-science explanations for rising wage inequality have reached a dead end. Most economists argue that computerization has been primarily responsible, while on the other side of the argument are sociologists and political scientists who stress the role of political forces in the evolution process of wages.
In this ERC project I advance an original theory on the complex dynamics between technology and politics in order to solve two unsettled questions regarding the role of computerization in rising wage inequality: First, how can computerization, which diffused simultaneously in rich countries, explain the divergent inequality trends in Europe and the United States? Second, what are the mechanisms behind the well-known observed positive correlation between computers and earnings?
The main objectives of this project are, therefore, to:
1) Theorize the delayed rise in wage inequality in Europe and the sharp rise in the United States, underlining the interaction between computers and class politics in producing the observed trends.
2) Develop a new structural conceptualization of the mechanisms behind the positive correlation between computerization and earnings, while emphasizing how the process of computerization transformed the politics of the production process in a way that increased the bargaining power of experts and managers and hence their relative earnings.
3) Pose an original approach to measuring computerization that captures the form of workers’ interaction with computers at work, making it possible to empirically test the two theses.
4) Form a research strategy for analysing the effect of computerization on the wage structure across countries and workplaces, and over time.
This research project challenges the common understanding of technology’s role in producing economic inequality, and would thereby significantly impact all of the abovementioned disciplines, which are debating over the upswing in wage inequality, as well as public policy, which discusses what should be done to confront the resurgence of income inequality.
In this ERC project I advance an original theory on the complex dynamics between technology and politics in order to solve two unsettled questions regarding the role of computerization in rising wage inequality: First, how can computerization, which diffused simultaneously in rich countries, explain the divergent inequality trends in Europe and the United States? Second, what are the mechanisms behind the well-known observed positive correlation between computers and earnings?
The main objectives of this project are, therefore, to:
1) Theorize the delayed rise in wage inequality in Europe and the sharp rise in the United States, underlining the interaction between computers and class politics in producing the observed trends.
2) Develop a new structural conceptualization of the mechanisms behind the positive correlation between computerization and earnings, while emphasizing how the process of computerization transformed the politics of the production process in a way that increased the bargaining power of experts and managers and hence their relative earnings.
3) Pose an original approach to measuring computerization that captures the form of workers’ interaction with computers at work, making it possible to empirically test the two theses.
4) Form a research strategy for analysing the effect of computerization on the wage structure across countries and workplaces, and over time.
This research project challenges the common understanding of technology’s role in producing economic inequality, and would thereby significantly impact all of the abovementioned disciplines, which are debating over the upswing in wage inequality, as well as public policy, which discusses what should be done to confront the resurgence of income inequality.
The first objective of the CBTC research project was to theorize the delayed rise in wage inequality in Europe and the sharp rise in the US, underlining the interaction between computers and class politics in producing the observed trends, and introducing the CBTC thesis. In an article published in Socio-Economic Review (2021), I developed a new agenda stating that politics moderates the effect of technological change on wages by stimulating norms of fair pay and equity. In the article, co-authored with Susanne Edler, we argue that the computer wage premium, which indicates whether workers who use a computer at work earn higher wages than workers who do not, is governed by the national institutional context, fostered by class politics (cross-class alliances and inter-class conflicts), which sets wage determination norms and practices. Analyzing the Survey of Adult Skills and indicators for pay-setting institutions and education systems at the country level, the findings reveal that, as expected, computer use at work is considerably higher in Liberal Market Economies countries than in other countries – Nordic Coordinated Market Economies above all. These results signify the centrality of coordinated markets, grounded in strong unions, centralized wage bargaining, and publicly funded education and training, for lower computer wage gaps and, hence, lower wage inequality levels.
The second objective of the CBTC research project was to develop a new structural conceptualization of the mechanisms behind the positive correlation between computerization and earnings, while emphasizing how the process of computerization transformed the politics of the production process in a way that increased the bargaining power of experts and managers and hence their relative earnings. I have accomplished this objective in three articles.
In an article published in Work and Occupations (2019), I developed a new theoretical framework that specifies what computerization does to unions. Supporting my theory, I showed that the computerization of U.S. workplaces accounts for about a quarter of the decline in union density – partly by changing the skill composition and partly by enhancing employers’ resistance to unions as measured by their use of unfair labor practices and decertification elections as documented by the NLRB.
In an article published in Work and Occupations (2020), I conceptualized the earnings advantage deriving from computerization around access to and control of information on the production process. I developed a new approach to measuring workers’ interaction with computers at work by measuring what workers do with computers and their location in the information flow (e.g. enter, manage, or utilize data) at the occupation level (CBTC third objective) and collated these occupational measures with the 1979–2016 Current Population Surveys (CPS). The analyses revealed a wage premium for occupations with greater access to and control of information. This information wage premium has risen over time, becoming more important than technological skill in explaining between-occupation wage inequality and, consequently, aggregate levels of wage inequality.
Based on this new approach to measuring computerization, in a fourth article, co-authored with Efrat Herzberg Druker and Adena White, we studied whether the wage premium on using computers at work is gender or non-gender-specific. In this article, published in Research in Social Stratification and Mobility (2024), we argue that the computer wage premium is, in part, gender-specific because gender as a status distinction can be an essential mechanism whereby workers may (or may not) gain earnings advantages from using computers at work. Our findings that the computer wage premium is biased in favor of men at the occupation level suggest that computer-based technologies relate to reproducing old forms of gender pay inequality due to gendered processes that operate mainly at the structural level (i.e. occupations).
The fourth objective of the CBTC research project was to form a research strategy for analyzing the effect of computerization on the wage structure across countries, workplaces, and over time. I have accomplished this objective in the four papers outlined above.
The second objective of the CBTC research project was to develop a new structural conceptualization of the mechanisms behind the positive correlation between computerization and earnings, while emphasizing how the process of computerization transformed the politics of the production process in a way that increased the bargaining power of experts and managers and hence their relative earnings. I have accomplished this objective in three articles.
In an article published in Work and Occupations (2019), I developed a new theoretical framework that specifies what computerization does to unions. Supporting my theory, I showed that the computerization of U.S. workplaces accounts for about a quarter of the decline in union density – partly by changing the skill composition and partly by enhancing employers’ resistance to unions as measured by their use of unfair labor practices and decertification elections as documented by the NLRB.
In an article published in Work and Occupations (2020), I conceptualized the earnings advantage deriving from computerization around access to and control of information on the production process. I developed a new approach to measuring workers’ interaction with computers at work by measuring what workers do with computers and their location in the information flow (e.g. enter, manage, or utilize data) at the occupation level (CBTC third objective) and collated these occupational measures with the 1979–2016 Current Population Surveys (CPS). The analyses revealed a wage premium for occupations with greater access to and control of information. This information wage premium has risen over time, becoming more important than technological skill in explaining between-occupation wage inequality and, consequently, aggregate levels of wage inequality.
Based on this new approach to measuring computerization, in a fourth article, co-authored with Efrat Herzberg Druker and Adena White, we studied whether the wage premium on using computers at work is gender or non-gender-specific. In this article, published in Research in Social Stratification and Mobility (2024), we argue that the computer wage premium is, in part, gender-specific because gender as a status distinction can be an essential mechanism whereby workers may (or may not) gain earnings advantages from using computers at work. Our findings that the computer wage premium is biased in favor of men at the occupation level suggest that computer-based technologies relate to reproducing old forms of gender pay inequality due to gendered processes that operate mainly at the structural level (i.e. occupations).
The fourth objective of the CBTC research project was to form a research strategy for analyzing the effect of computerization on the wage structure across countries, workplaces, and over time. I have accomplished this objective in the four papers outlined above.
A significant advance has made in reaching the four main objectives of this project. First, the project team developed a new institutional agenda stating that politics, broadly defined, mitigates the effects of technological change on wages by stimulating norms of fair pay and equity. Second, we also formulated a truly novel perspective that conceptualizes the earnings advantage that derives from computerization around access to and control of information on the production process. Third, to make it possible to empirically examine these new theories, we collected and analysed data from several sources for many occupations in order to construct a new database on occupations that contains rich information on the scope of their computerization. Lastly, we established several research strategies for analysing the effect of computerization on the wage structure across OECD countries and workplaces, and over time.