This article offers a new account of rising inequality by providing a new explanation for the observed correlation between computerization and earnings. The argument is that as computers transformed work into a more knowledge-intensive activity, occupations located at critical junctions of information flow have gained greater structural power, and thereby higher wages.

 

Combining occupational measures for location in the information flow based on the Occupational Information Network with the 1979–2016 Current Population Surveys, the analyses reveal a rising wage premium for occupations with greater access to and control of information, independent of the spectrum of skills related to computerization.

This article offers a new explanation for union decline by focusing on a currently neglected site that exemplifies the fragility of unions—the shop floor in the computer revolution era. Using data from several sources including the National Labor Relations Board, it analyzes the effect of using a computer at work on the odds of being a union member and the broader effect of computerization on union strength within detailed industries between 1973 and 2002.Workers who used a computer at work were found less likely to be union members, and computerization of workplaces accounted for about a quarter of the decline in union density within industries; partly by changing the skill composition of industries’ workforces and partly by enhancing employers’ resistance to unions asmeasured by their use of unfair labor practices and decertification elections as documented by the Nationa l Labor Relations Board.

 

The findings are explained in a new theoretical framework that specifies what computerization does to unions by (a) reshaping the way products are made and services are provided and (b) boosting a profound power shift throughout workplaces.

This article addresses an important question in the age of rapid spread of new computer technologies: how do institutions influence the computer wage premium? To identify institutional factors that account for differences in computers’ impact on wages, the authors estimate computer wage premiums for 20 countries classified into three national ‘varieties’ of capitalism and distinct forms of industrial relations and education systems. The analyses are based on unique international data from the Survey of Adult Skills, recently conducted by the Organisation for Economic Co-operation and Development.

 

Results reveal that computer use at work is rewarded considerably higher in Liberal countries than in other countries—Nordic Coordinated countries 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, hence for lower levels of wage inequality.