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Findings

What do computers do?

A Class-Biased Technological Change(CBTC) approach

The aim of this research project is to explore the role of computerization as an engine of inequality in Europe and North America, and thereby gain a better understanding of the relations between technology and politics.

The CBTC thesis challenges the Skill-Biased technological change (SBTC) thesis:

  • Instead of assuming universal technological trend (SBTC), the CBTC argues for an institutional variety that matter.

  • Instead of conceptualizing the earnings advantage from computers around skill and productivity (SBTC), the CBTC conceptualizes it around workers’ relative bargaining power.

 

…but the CBTC thesis does not contradict the SBTC thesis, although the findings suggest that CBTC might be more important than the SBTC in explaining the role of technology in rising inequality.

The CBTC project aims to solve two unsettled questions regarding the role of computerization in rising wage inequality:

How can computers, which have spread across workplaces in all rich countries, explain the divergent inequality trends in Europe and the US?

 

To answer the first question, the CBTC project theorizes 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.

1

Kristal, Tali and Susanne Edler. 2019. “Computers Meet Politics at the Wage Structure: An Analysis of the Computer Wage Premium across Rich Countries.” Socio-Economic Review >

 

Argument: 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.

Empirical strategy: To identify institutional factors that account for differences in computers’ impact on wages, we 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.

Findings: 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.

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 1

countries political economy

CBTC Research strategy 1 | countries political economy

Argument: Computers’ effect on the wage structure is governed by the institutional context, which shapes the wage-determination norms and practices of firms.

Empirical strategy: We estimate whether institutional differences across workplaces in wage coordination can moderate the impact of computer usages on individual wages. The analyses are based on large linked employer-employee data from the European Structure of Earnings Survey (ESES) for the year 2014 matched to data on occupational computer usages from PIAAC.

Findings: Results show that, as expected, the computer wage premium is lower in large and covered establishments.

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 2 

workplaces coordinated wage settings

CBTC Research strategy 2 | workplaces coordinated wage settings

What are the mechanisms behind the well-known observed positive correlation between computers and earnings?

 

To answer the second question, the CBTC project develops a new conceptualization of 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.

2

Kristal, Tali. 2019. “Computers and the Decline of American Unions: Is Computerization Class-Biased?” Work and Occupations 46(4):371-410.

Argument: Computerization catalyzed the changes in the economic and political conditions on the shop floor that led to union decline.

Empirical strategy: Using data from several sources including the National Labor Relations Board, we analyze 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.

Findings: 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 as measured by their use of unfair labor practices and decertification elections as documented by the National Labor Relations Board.

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 3 

unions power

CBTC Research strategy 3 | unions power

Argument: Computer-based technologies have changed the social relations at the workplace in fundamental ways that have altered labor relations practices of establishments, and consequently boosted earnings inequality.

Empirical strategy: We analyze sixteen years of German administrative data on a reprehensive sample of workplaces and their employees, the Linked-Employer-Employee-Data of the IAB (LIAB), 1999-2014.

 

Findings: Computerization at workplaces accounts for an important share of the spread in low- and high-road Human Resource Management (HRM) practices.

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 4 

flexibility in practices of employment

CBTC Research strategy 4 | flexibility in practices of employment

Kristal, Tali. 2020. “Why Has Computerization Increased Wage Inequality? Information, Occupational Structural Power and Wage Inequality.” Work and Occupations 47(4): 466-503.

Argument: Computers have opened up new opportunities for enhancing the earnings of the already privileged by placing already well-rewarded occupations at critical junctions of information flow, capitalizing their access to and control of information on the labor process. This has led to an increase in their bargaining power, hence also in their relative earnings.

Empirical strategy: We estimate the wage premium in tasks related to entering, managing, and utilizing information and knowledge of the labor process. First we utilize the rich information from the Occupational Information Network (O*NET) to build measures at the occupational level for location in the information flow—from entering data to managing and utilizing data. We combine these representative data on occupational features with large samples of wage and salary workers from the monthly outgoing rotation group (MORG) supplement to the 1979–2016 Current Population Surveys (CPS-ORG) and with the CPS’s Annual Social and Economic Supplement (ASEC).

Findings: Over-time estimations and sensitivity tests for returns to different locations in the information flow show:

  1. A significant wage premium for occupations that have privileged access to and control of information on the production process, when workers’ human capital, time-invariant unmeasured abilities, and occupational skills are controlled for,

  2. That this wage premium has increased over time.

  3. Becoming more important than a spectrum of skills related to computerization.

 

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 5 

power over information

CBTC Research strategy 5 | power over information

Argument: Computer-based technology reproduces old forms of gender-based inequality.

 

Empirical strategy: We analyze occupational and individual-level data on computer use at work from O*NET attached to the 1979–2016 Current Population Surveys and from the 2012 Survey of Adult Skills.

 

Findings: We find two computerization-related obstacles for women: (1) occupational gender concentration in simple and complex computer usages, respectively, with the latter rewarded with higher wages; and (2) devaluation of computer tasks usually performed by women.

 

Conclusions: Computerization is a class-based process with classed outcomes.

CBTC Research strategy 6

structural forms of gender inequality

CBTC Research strategy 6 | structural forms of gender inequality