This study explores the relationship between technology and the graduate wage premium in a world characterised by the increasing importance of intangible assets. Using the EUKLEMS -INTANProd database for the US, the UK and 6 European countries over the 1995-2019 period, we find that the graduate wage premium has declined in most countries and industries, a trend that precedes the 2007 financial crisis. This decline is mainly explained by the increasing supply of workers educated at the tertiary level. Technology is still skill biased but with heterogeneous effects across industries and different technology indicators. Using a dynamic model specification reveals that both ICT and intangible assets complement skilled labour. However, when differentiating between AI creating and AI using sectors, we find that the relationship between technology and the skill premium is stronger in AI creating industries, and it intensifies after 2005. This indicates that complementarities between the latest wave of technology and skills is particularly concentrated in the most innovative sectors within countries.
Authors Mary O ’Mahony, Catherine Robinson, Michela Vecchi