The impact of ICT and workplace organization on the demand for labour

(project 014-43-711)

Short summary of the research problem

The research investigates the following main question: How do the combination of innovations in the field of ICT, organizational structure and work form, and the development of new products and services change the allocation of and demand for labour? To answer this question empirically, the main contribution will be to distinguish several lines of causality in the firm’ s behaviour for analysing the relationship between workplace organization and the demand for labour. The theoretical contribution is a model of the firm to understand changes due to ICT, what type of firms adopt ICT, and when and why they do so.

Scientific relevance

The scientific relevance of the proposed research is twofold. First, a mechanism is developed to explain why ICT could be a source of increasing demand for relatively higher educated workers and wage inequality. Not the direct use of ICT, but much more the interplay of ICT, level of education, changes in the organization of work and the output mix are the most likely causes for changing labour demand. Second, the developments in the changing organization of work and demand for labour are analysed for four countries to improve the consistency of the study and to map international trends.

Social and policy relevance

The social and policy relevance of the project is threefold. First, the monitoring of the diffusion of ICT is of interest, because it provides insight into the extent of difficulties lower educated workers are likely to experience when ICT diffuses. Particularly at the lower end of the labour market ICT might bring about social problems, because especially this part of the labour force does not posses the relevant skills or education which are likely increase in demand. Second, the changing organization of work demands a different mix of skills, to which the educational system should respond. Since it is likely that ICT leads to skill upgrading, the demand for higher educated workers will increase and monitoring this trend might yield insight into the specific skills demanded. In addition, new tasks might emerge at the workplace which might be taught at school. However, one should keep in mind that not always skills used at work are best acquired at school. Third, the tendency towards the tailoring of products and services leads to an increase in the demand of specialist products. This likely induces a trend towards a labour demand which is able to perform many tasks and has greater product knowledge.

Methodology

The research analyses the impact of ICT, the changing organization of work and new products/services on the demand for labour. To investigate this, two crucial ingredients are necessary. First, a theoretical model providing insight into the determinants of the adoption of ICT, leading to a specific organization of work and innovations of products and services. The adoption of ICT and the subsequent changes in the firm have changed the optimal skill mix, which depends both on ICT itself and the organizational and production process. Second, an empirical analyses comparing the developments in four countries concerning the consequences of ICT on (1) the way in which firms organize production and the cooperation of workers, and (2) the interplay (or endogeneity) of ICT, organization, production and the demand for labour.

Research

Prof. dr. L.L.G. Soete and Drs. B. Ter Weel
Maastricht Economic Research Institute on Innovation and Technology (MERIT); Maastricht University.

Results

Ter Weel, B., “The structure of wages in the Netherlands, 1986 1998,” Labour – Review of Labour Economics and Industrial Relations, vol. 17, no. 3, pp. 361-382, September 2003.

Borghans, L. and B. ter Weel, “Computertechnologie, organisatorische verandering en werkdruk,” I&I Nieuwe Media in Perspectief, vol. 21, no. 6, pp. 28-33, 2003.

Borghans, L. and B. ter Weel, “ICT en de organisatie van werk in Nederland, 1988-2000,” in: P. Ester et al. (eds.) , ICT, arbeid en organisatie, Reed Business Information: The Hague, pp. 59-84, 2003.

Borghans, L. and B. ter Weel, “What happens when agent T gets a computer? The labor market impact of cost efficient computer adoption,” Journal of Economic Behavior & Organization, vol. 54, no. 2, pp. 137-151, June 2004.

Borghans, L. and B. ter Weel, “Tijd om te meten,” Economisch Statistische Berichten, vol. 89, no. 4423, p. 19, 2004.

Borghans, L. and B. ter Weel, “Are computer skills the new basic skills? The returns to computer, writing and math skills in Britain,” Labour Economics, vol. 11, no. 1, pp. 85-98, February 2004.

Borghans, L. and B. ter Weel, “How computerization has changed the labour market: A review of the evidence and a new perspective,” in L. Soete and B. ter Weel (eds.), The economics of the digital society, Edward Elgar: Cheltenham, pp. 219-247, November 2005.

Soete, L. and B. ter Weel, “Introduction and summary,” in L. Soete and B. ter Weel (eds.), The economics of the digital society, Edward Elgar: Cheltenham, pp. 1-13, November 2005.

Soete, L. and B. ter Weel (eds.), The economics of the digital society, Edward Elgar: Cheltenham, November 2005, 384 pp.

Ter Weel, B. “IT diffusion and industry and labour-market dynamics,” Economic Journal, vol. 116, no. 509, pp. F1-F9, February 2006.

Borghans, L. and B. ter Weel, “The division of labour, worker organisation and technological change” Economic Journal, vol. 116, no. 509, pp. F45-F72, February 2006.

Zie ook elders op deze site (nieuws):
Artikelen MERIT workshop Information Technology and New Industry and Labour Market Dynamics