Abstract
This paper contributes to the discussion of the impact of digital transformation on labour markets by analysing the impact on wage inequality.
The novelty of this paper is on the one hand the quantitative approach that applies a macroeconometric input-output model which accounts for circular flow in the economy and feedback loops. Most of the studies on wage inequality and digital transformation focus on ex-post analysis. The applied quantitative model used in this paper also allows to perform ex-ante analysis. This is important, as economy 4.0 is not yet reflected in current datasets which makes statements about the impact of economy 4.0 on wage inequality on basis of ex-post analysis difficult.
On the other hand, it uses the inequality measures S80/S20 that has been applied to a unique dataset on employment and wages. The dataset differentiates on industry and occupational level. That allows to identify industry*occupation combination and their location in the upper and/or lower 20 % share ratio of wage distribution. The analysis demonstrates that digital transformation increases wage inequality, however to a low extent. The increase in wage inequality is already implemented in the reference scenario due to structural and demographic change. Digital transformation strengthens the impact of structural change on wage inequality. Especially in the long run, wage inequality rises stronger than in the reference scenario.
Because the digital transformation scenario does not confirm the polarization hypothesis, the impact of economy 4.0 on wage inequality remains rather low. The increasing demand of high-skilled employees is reflected in an increase in wage inequality. However, the relatively low impact of digitalisation on low-skilled employees prevents a stronger increase in wage inequality.
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Note
This article is part of the special issue “Digitalisation and the Labor Market” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at www.degruyter.com/journals/jbnst.
ANNEX I
List of industry sectors.
Nr. | Industry sector |
---|---|
1 | Agriculture |
2 | Forestry |
3 | Fishing |
4 | Mining, extraction of stones and earth |
5 | Manufacture of food and drink, tobacco processing |
6 | Manufacture of textiles, clothing, leather goods and shoes |
7 | Manufacture of wood, wicker, basket and cork goods (not including furniture) |
8 | Manufacture of paper, cardboard and of paper and cardboard products |
9 | Manufacture of printing products, reproduction of sound, picture and data storage media |
10 | Manufacture of coke and refined petroleum products |
11 | Manufacture of chemical products |
12 | Manufacture of pharmaceutical products |
13 | Manufacture of rubber and plastic products |
14 | Manufacture of glass products, manufacture of ceramics, processing of stones and earth |
15 | Metal production and processing |
16 | Manufacture of metal products |
17 | Manufacture of computer, electronic and optical products |
18 | Manufacture of electrical equipment |
19 | Engineering |
20 | Manufacture of motor vehicles and motor vehicle components |
21 | Other vehicle construction |
22 | Manufacture of furniture and other goods |
23 | Repair and installation of machines and equipment |
24 | Energy supply |
25 | Water supply |
26 | Sewage, waste disposal, materials recovery |
27 | Construction sector |
28 | Motor vehicle trade, maintenance and repair of motor vehicles |
29 | Wholesale (not including the motor vehicle trade) |
30 | Retail (not including retail of motor vehicles) |
31 | Land transport and transport in pipelines |
32 | Shipping |
33 | Aviation |
34 | Warehousing, other transport service providers |
35 | Post, courier and express services |
36 | Hotel and restaurant trade |
37 | Publishing |
38 | Audiovisual media and radio |
39 | Telecommunications |
40 | IT and information service providers |
41 | Financial services providers |
42 | Insurance and pension funding |
43 | Activities associated with financial and insurance services |
44 | Real estate |
45 | Legal and tax consultancy, management consultancy |
46 | Architectural and engineering companies, technical support |
47 | Research and development |
48 | Advertising and market research |
49 | Freelance, scientific, technical services (not mentioned elsewhere), veterinary medicine |
50 | Renting of mobile goods |
51 | Placement and hiring of workers |
52 | Travel agencies and tour operators |
53 | Service providers (not mentioned elsewhere) |
54 | Public administration, defence, social security |
55 | Education and teaching |
56 | Healthcare system |
57 | Residential homes and social services |
58 | Art and culture, gambling |
59 | Sport, entertainment and recreation |
60 | Lobbying, religious associations |
61 | Repair of computers and used goods |
62 | Other providers of mainly personal services |
63 | Housekeeping services |
List of occupational fields.
Nr. | Occupational field |
---|---|
1 | Agriculture, husbandry, forestry, horticulture |
2 | Miners and mineral extraction workers |
3 | Stoneworking, construction materials production, ceramics and glass related occupations |
4 | Chemical and plastics occupations |
5 | Paper manufacture, paper processing, printing |
6 | Metal production and processing |
7 | Metal, plant and sheet metal construction, installation, fitters |
8 | Industrial mechanics, tool mechanics |
9 | Vehicle and aircraft construction, maintenance occupations |
10 | Precision engineering and related occupations |
11 | Electrical occupations |
12 | Textile processing, leather manufacture |
13 | Cooks |
14 | Production of beverages, food and tobacco, other nutrition occupations |
15 | Construction, woodworking, plastics manufacture and processing occupations |
16 | Auxiliary workers without further specified task |
17 | Engineers |
18 | Chemists, physicists, scientists |
19 | Technicians |
20 | Technical draughtsmen/ draughtswomen, related occupations |
21 | Surveying and mapping |
22 | Specialist skilled technicians |
23 | Commodity trade in retail |
24 | Wholesale/retail service occupations |
25 | Banking and insurance professionals |
26 | Other commercial occupations (not including wholesale, retail, banking) |
27 | Advertising specialists |
28 | Transport and logistics occupations |
29 | Aviation, shipping occupations |
30 | Packers, warehouse and transport occupations |
31 | Managing directors, auditors, management consultants |
32 | administrative occupations |
33 | Finance, accounting, bookkeeping |
34 | Core IT occupations |
35 | Commercial office occupations |
36 | Auxiliary office occupations, telephone operators |
37 | Personal protection, guards |
38 | Janitors |
39 | Security occupations |
40 | Legal occupations |
41 | Artists, musicians |
42 | Designers, photographers, advertising creators |
43 | Healthcare occupations requiring a medical practice licence |
44 | Healthcare occupations not requiring a medical practice licence |
45 | Social occupations |
46 | Teaching occupations |
47 | Journalists, librarians, translators, related academic research occupations |
48 | Body care occupations |
49 | Hotel and restaurant occupations, housekeeping |
50 | Cleaning and disposal occupations |
ANNEX II
Descriptive statistics of daily wages per full-time person day, 1995–2013.
1 | 2 | 3 | 4 | 5 | |
---|---|---|---|---|---|
year | mean | standard deviation | min | max | S80/S20 |
EUR | EUR | EUR | EUR | ||
1995 | 76.16 | 20.73 | 1.38 | 131.12 | 2.00 |
1996 | 77.48 | 21.09 | 9.39 | 134.11 | 1.99 |
1997 | 78.57 | 22.05 | 5.35 | 137.84 | 2.00 |
1998 | 81.68 | 22.97 | 10.39 | 155.04 | 2.14 |
1999 | 82.85 | 23.78 | 7.12 | 142.88 | 2.12 |
2000 | 84.19 | 23.99 | 10.06 | 144.17 | 2.09 |
2001 | 86.01 | 24.39 | 10.09 | 155.82 | 2.10 |
2002 | 87.51 | 24.95 | 10.09 | 147.95 | 2.13 |
2003 | 91.43 | 27.66 | 10.09 | 167.67 | 2.29 |
2004 | 92.18 | 29.47 | 7.80 | 558.00 | 2.31 |
2005 | 93.04 | 29.05 | 8.85 | 187.30 | 2.38 |
2006 | 94.03 | 29.34 | 10.09 | 172.60 | 2.36 |
2007 | 95.13 | 29.41 | 9.97 | 173.20 | 2.41 |
2008 | 96.77 | 29.79 | 10.54 | 271.90 | 2.44 |
2009 | 98.02 | 30.06 | 10.32 | 178.49 | 2.35 |
2010 | 99.38 | 30.68 | 19.12 | 180.82 | 2.42 |
2011 | 100.60 | 30.41 | 10.40 | 180.82 | 2.37 |
2012 | 103.73 | 30.79 | 10.44 | 268.99 | 2.32 |
2013 | 106.29 | 31.09 | 11.15 | 190.69 | 2.33 |
Source: IAB Employment History Data (EHD)
© 2019 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston
Articles in the same Issue
- Frontmatter
- Editorial
- Special Issue: Digitalisation and the Labor Market
- Original Articles
- Economy 4.0 – Digitalisation and Its Effect on Wage Inequality
- Digitalization, Multinationals and Employment: An Empirical Analysis of Their Causal Relationships
- Controlling Working Crowds: The Impact of Digitalization on Worker Autonomy and Monitoring Across Hierarchical Levels
- The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany
- Do German Works Councils Counter or Foster the Implementation of Digital Technologies?
- On-Demand Digital Economy: Can Experience Ensure Work and Income Security for Microtask Workers?
Articles in the same Issue
- Frontmatter
- Editorial
- Special Issue: Digitalisation and the Labor Market
- Original Articles
- Economy 4.0 – Digitalisation and Its Effect on Wage Inequality
- Digitalization, Multinationals and Employment: An Empirical Analysis of Their Causal Relationships
- Controlling Working Crowds: The Impact of Digitalization on Worker Autonomy and Monitoring Across Hierarchical Levels
- The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany
- Do German Works Councils Counter or Foster the Implementation of Digital Technologies?
- On-Demand Digital Economy: Can Experience Ensure Work and Income Security for Microtask Workers?