Computerisation and Wage Dispersion: An Analytical Reinterpretation

Abstract

The rich countries have recently seen a dramatic rise in income inequality, all the more surprising because the long‐term trend had been toward equality. This paper examines one of the leading explanations; computerisation in the workplace. I offer a theory of computers’ impact on white‐collar work which goes far toward explaining the timing, form, and locus of recent labour market changes. The theory looks at the bureaucratic and organisational applications of computers that have been first, largest, and most influential. They have two effects on firms’ demand for labour at different skill levels.