Feature: It Diffusion and Industry and Labour‐Market Dynamics

Abstract

The emergence and rapid diffusion of information and communication technology is the most radical technological transformation of the last couple of decades and has had an enormous economic impact. This bundle of four articles contains research that discusses major economic implications of the diffusion of IT. They focus on two main implications of IT: (i) networks and industry dynamics, and (ii) IT and workplace organisation. The two sets of two articles contribute both original theoretical insights and new empirical results to these themes.The adoption and rapid diffusion of the bundle of new information and communication technologies has been the most radical technological change of recent decades. Economists have been focussing on the economic consequences for education, wages, workplace organisation, markets and competition, and networks and innovation of this technological revolution for quite some time now. The four contributions cover core issues of networks and industry dynamics, and workplace organisation and the demand for labour in relation to the IT revolution.The IT revolution has caused the costs of many kinds of interactions to drop by making a great many processes operate more efficiently and it has allowed the opportunity to engage in new interactions that have become cost effective. At first, revolutionary technologies are implemented in a rather mechanical way to make it less costly to produce the same level of output. The main reason for Charles Babbage to manufacture and use a ÔcomputerÕ was to deal more accurately and efficiently with information (Babbage, 1832). 1 Such Ônumber crunchersÕ were the main appearance of computers until the late 1960s mainly used to carry out mathematical and statistical procedures, mass-integrated data processing and simulations of Bayesian decision-making. 2 Over time, a revolutionary technology changes and amends (in an endogenous or co-invention manner) to do entirely new things, such as to change the way in which markets * This Feature is a selection of contributions to the 3-4 June 2004 MERIT Workshop on ÔInformation

Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure

“…How can we improve our knowledge of the macro developments by taking into account what we know from the micro literature about individual workers? The theoretical approach we follow is to account for worker 1 Bresnahan and Greenstein (1996), Bresnahan (1999) and ter Weel (2006) provide overviews of the development of computer technology applications and their use in the workplace. 2 President of the United States Bill Clinton addressed this fear in a 1996 speech in Knoxville, Tennessee.…”

Labor Market Dynamics and Technology Adoption: Theory and Empirical Evidence

“…In other words, the economy is subdivided into 4 For a more detailed survey see Rogerson et al (2005) 5 Some interesting aspects of technology adoption can be found in the work of Linn (2008) concerning energysaving technologies while Bandiera and Rasul (2006) examine the process of technology adoption in agriculture. Weel (2006) attempts to introduce the issue of technology di¤usion in a context of labour market dynamics. This analysis however, is mainly empirical without an explicit theoretical background.…”

Revolutionary Effects of New Information Technologies

“…1 1 See Bresnahan and Greenstein (1996) for a historical account of the development of computer technology and ter Weel (2006), in the Introduction to this Feature, for a discussion of the role and evolution of computer technology in production and networking. …”