Full Citation

Title: Increasing returns to scale within limits: A model of ICT and its effect on the income distribution and occupation choice

Citation Type: Journal Article

Publication Year: 2020

ISBN:

ISSN:

DOI: 10.1016/j.jet.2020.105105

NSFID:

PMCID:

PMID:

Abstract: A key feature of Information and Communication Technologies (ICT) is that they increase the size of the market – or the “scale of operation” – for workers in some occupations. We model the scale of operation as the limit up to which the production technology displays increasing returns to scale. We then explore the implications of this feature of ICT for the income distribution within affected occupations, as well as for individuals' occupational choices. Within occupations, an increase in the scale of operation intensifies competition between workers and increases inequality. It also drives the lowest-ability workers out of the occupation while reducing the earnings of the next lowest-ability workers when the substitutability between the output of the affected occupations and that of the rest of the economy is low.

Url: https://www-sciencedirect-com.ezp2.lib.umn.edu/science/article/pii/S0022053120300983

Url: https://doi.org/10.1016/j.jet.2020.105105

User Submitted?: No

Authors: Wang, Tianxi; Wright, Greg C.

Periodical (Full): Journal of Economic Theory

Issue:

Volume: 189

Pages: 105105

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

Countries: