TY - JOUR AU - Beaudry,Paul AU - Doms,Mark AU - Lewis,Ethan TI - Endogenous Skill Bias in Technology Adoption: City-Level Evidence from the IT Revolution JF - National Bureau of Economic Research Working Paper Series VL - No. 12521 PY - 2006 Y2 - September 2006 UR - http://www.nber.org/papers/w12521 L1 - http://www.nber.org/papers/w12521.pdf N1 - Author contact info: Paul Beaudry Department of Economics University of British Columbia Vancouver, Canada Tel: 604/822-8624 Fax: 604/822-5915 E-Mail: paulbe@interchange.ubc.ca Mark Doms Department of Commerce Economics and Statistics Administration E-Mail: mdoms@doc.gov Ethan G. Lewis Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-2943 Fax: 603/646-2122 E-Mail: ethan.g.lewis@dartmouth.edu M3 - presented at "SI 2006 Labor Studies Workshop", July 24-28, 2006 AB - This paper focuses on the bi-directional interaction between technology adoption and labor market conditions. We examine cross-city differences in PC-adoption, relative wages, and changes in relative wages over the period 1980-2000 to evaluate whether the patterns conform to the predictions of a neoclassical model of endogenous technology adoption. Our approach melds the literature on the effect of the relative supply of skilled labor on technology adoption to the often distinct literature on how technological change influences the relative demand for skilled labor. Our results support the idea that differences in technology use across cities and its effects on wages reflect an equilibrium response to local factor supply conditions. The model and data suggest that cities initially endowed with relatively abundant and cheap skilled labor adopted PCs more aggressively than cities with relatively expensive skilled labor, causing returns to skill to increase most in cities that adopted PCs most intensively. Our findings indicate that neo-classical models of endogenous technology adoption can be very useful for understanding where technological change arises and how it affects markets. ER -