Computerization, occupational tasks and the labor market: evidence from a natural experiment in Brazil
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2016-02-18
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Pinto, Cristine Xavier
Firpo, Sergio Pinheiro
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The 'routinization' or 'routine-biased technological change' hypothesis states that computers substitute for routine tasks - those that follow procedures that can be codified into computer software - and complement nonroutine abstract tasks. This paper testssome natural predictions of 'routinization' on labor market outcomes of a large developing economy. We use the end of the Brazilian market reserve policy on mini- and microcomputers (October 1992) as a natural experiment generating exogenous variation in technology prices to identify the effects of computerization on wages and labor inputs. Using matched employer-employee longitudinal data, we show that labor input shifted more prominently toward nonroutine manual and away from routine tasks after the price shock. Also, two (three) years after the shock the partial effect of our occupational measure on real wages was approximately 5% (6%) higher, following the begin of the growth in the IT hardware market size. Jointly, these results contribute to a growing literature based on 'task approaches' by bringing testable implications of a plausibly exogenous computer price decline to a setting with a more credible source of identification.