DPP Visiting Faculty Ljubica Nedelkoska wins 2023 DRUID Best Paper Award

June 30, 2023

DPP visiting professor Ljubica Nedelkoska has won the 2023 DRUID Best Paper Award with the paper titled "Eight Decades of Changes in Occupational Tasks, Computerization and the Gender Pay Gap", co-authored with Shreyas Gadgin Matha, James McNerney, Andre Assumpcao, Dario Diodato, and Frank Neffke. Organized by the Copenhagen Business School, DRUID is one of the largest conferences on innovation studies/innovation economics/innovation management. There were 340 papers presented this year, three papers were nominated, and one won the prize.

Background of the paper and research question

If we could peek into the factories and offices of industrialized economies in the early 1970s, we would have seen a great gender divide. Only about 40 percent of working age women participated on the labor market, half the participation rate of men. Among the working women in the United States, about half worked in clerical jobs, while men overwhelmingly worked in industry. At the economy’s average, for every dollar that men earned, women earned 60 cents (60 cents on the dollar). The advent of computers changed all this. While domestic appliances such as washing machines, refrigerators and vacuum cleaners freed up women’s time from domestic labor, computers actually enabled them to enter the workplace. Computers, which outside mainframe computing, were hardly used in the economy of the early 1970s, reached 40 percent of the desks of working Americans by 1989. Today, 70 percent of American jobs require the use of a computer, 58 percent of working age women participate on the labor market, and they earn more than 80 cents on the dollar.

The pace of workplace computerization and the closing of the pay gap follow a similar economy-wide pattern over time. In our working paper, we ask if computerization and the closing of the pay gap are causally related.

First key finding: Computers attracted women to good-paying jobs much more than men, which led to economy-wide closing of the pay gap.

Prior to computerization, relative to men, women specialized in office work, but they mainly occupied clerical and secretarial jobs, which did not pay all that well. We find that computerization freed up the way for more women to enter technical, managerial, and professional occupations, occupations traditionally held by men. They moved from jobs demanding routine cognitive tasks, to jobs with analytic and interactive work content. These are precisely the jobs that saw the largest pay increases since the advent of computerization. At the same time, great numbers of men specialized in manual work found it difficult to make a similar upward transition. Instead, we see these men enter low-paying services. Computerization more than explains the large increase in female employment between 1970 and today, placing millions of American women in well-paying jobs with exciting job content and career prospects. These gendered patterns of occupational change which computerization caused, [they estimate], helped close the gender pay gap in the United States between 1970 and today by a quarter.

Second key finding: Men have higher monetary returns to the use of computers even within same professions, and this led to widening of the pay gap. The higher returns for men more than offset the gains women had from entering well-paid computerized jobs.

There is also a downside of digitalization for women, at least in terms of their pay relative to men – the returns to using a computer (i.e., the extra pay one gets for using a computer at work) are significantly higher for men. This in fact contributed to a 45 percent increase in the gender wage gap since 1970s, bringing the net impact of computerization on the gender pay gap to a widening of 20 percent. That is, the negative effect of differential returns to computer use between the genders on the pay gap dominates the positive effect that computers had on attracting more women to the workplace.

In the same occupations, men received higher salaries for computer adoption than women. For instance, we observed that a male secretary gets paid more than a female secretary for using computers. It could be that male secretaries perform tasks more complementary with computers, a discriminatory practice, or a combination of these two.