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14 Sep 2020Working Paper Summaries

Digital Labor Market Inequality and the Decline of IT Exceptionalism

by Ruiqing Cao and Shane Greenstein

The experience in five cities accounts for almost all the wage inequality in IT wages in the US between 2000 and 2018. Overall that brought IT wages closer to STEM wages.

Author Abstract

Several decades of expansion in digital communications, web commerce, and online distribution have altered the U.S. labor market for IT workers. We characterize the shifts in regional IT labor markets from 2000 to 2018, and find that IT wage growth did not follow an exceptional pattern compared to broader STEM labor market trends. Digital wage inequality increased, almost entirely due to rising local premiums in a few urban metropolises, where wage spreads became narrower than elsewhere. The supply of college-educated workers accounted for a substantial share of the total wage difference between IT labor markets in top locations and other cities. Agglomeration and IT innovation explained a notably larger fraction of the top-location wage premium in more recent years