The Impact of Investments in New Digital Technologies on Wages – Worker-Level Evidence from Germany

Abstract

The strong rise of digitalization, automation, machine learning and other related new digital technologies has led to an intense debate about their societal impacts. The transitions of occupations and the effects on labor demand and workers’ wages are still open questions. Research projects dealing with this issue often face a lack of data on the usage of new digital technologies. This paper uses a novel linked employer–employee data set that contains detailed information on establishments’ technological upgrading between 2011 and 2016, a recent period of rapid technological progress. Furthermore, we are the first to develop a digital tools index based on the German expert database BERUFENET. The new index contains detailed information on the work equipment that is used by workers. Hence, we observe the degree of digitalization on both the establishment level and the worker level. The data allow us to investigate the impact of technology investments on the wage growth of employees within establishments. Overall, the results from individual level fixed effects estimates suggest that investments in new digital technologies at the establishment level positively affect the wages of the establishments’ workers. Sector-specific results show that investments in new digital technologies increase wages in knowledge intensive production establishments and non-knowledge intensive services. The wage growth effects of employees in digital pioneer establishments relative to the specific reference group of workers in digital latecomer establishments are most pronounced for low- and medium-skilled workers.

Artificial Intelligence (AI): Multidisciplinary perspectives on emerging challenges, opportunities, and agenda for research, practice and policy

“…The third industrial revolution with the invention of the computer brought increased automation and productivity but also increased pollution as a social aftermath (Kling, 1991;Langton, 1984). The literature on the fourth industrial revolution however has remained narrowly focused on the question of skills and whether human and AI are substitutes or complements on the labour market (Acemoglu, Autor, Dorn, Hanson, & Price, 2014;Autor, 2013;Brynjolfsson & Hitt, 2000;Frey & Osborne, 2017;Genz, Lehmer, & Janser, 2018;Katz & Margo, 2013). The literature is yet to engage with the significance of social change that will be involved in switching between human-made and AImade goods and services.…”

Do German Works Councils Counter or Foster the Implementation of Digital Technologies?

“…While some establishments intensively use digital technologies, one third of the establishments has not yet discussed the potential benefits or the implementation of digital devices. Additionally, Genz et al (2018) find that technological upgrading of establishments benefits the wage growth of the employees. Thus, heterogeneous diffusion of digital technologies across German establishments might also contribute to divergent wage growth potentials for workers across different establishments.…”

“…However, the reasons for this disparity in the implementation of digital technologies remain unexplained in the literature up to now. Genz et al (2018) use the same data set to analyze how digital technology investments affect employees within firms. They find that firm-level investments in new digital technologies positively affect the wage growth of the workforce.…”

Socio-Economic Processes Digitalization: New Opportunities And Challenges

“…So, in particular, some of them are devoted to a detailed study of the content and principles of the concept of "industry 4.0" (Roldan, Crespo, Martin-Barrio, Pena-Tapia, & Barrientos, 2019;Diez-Olivan, Del Ser, Galar, & Sierra, 2019;Madsen, 2019) and others are directly related to the introduction of digitalization in education (Hartong, 2019;Barabanova, Pavlenko, Ilyina, Zueva, & Saitov, 2019), including in higher education (Tomte, Fossland, Aamodt, & Degn, 2019). A number of studies are devoted to the study of the introduction of modern digital technologies on the example of certain public legal entities -for example, the United States (Spindler, 2019), Croatia (Tomljanovic, Grubisic, & Kamenkovic, 2019), Germany (Genz, Janser, & Lehmer, 2019;Spindler, 2019). Digital technologies and quantitative approaches were presented in some works (McDonald, Catacora, De Koning, & Middleton, 2016).…”