The Use of New Technology and Rising Inequality in New Zealand: Evidence from Unit Record Data

Abstract

From the late 19' 11 century to the late 20'11 century inequality was generally in decline in all the developed countries, including New Zealand. However this pattern was abruptly reversed in the 1970s, and at least up to the mid 1990s inequality was generally on the rise again. The last quarter of the 2fl' century was also marked by rapid uptake of new information and communication technologies (JCT), prompting many commentators to ask whether there might be a connection. The present study uses unit record data from the Household Labour Force Survey to explore the extent to which wage inequality is related to new technology in New Zealand, and the extent to which it is correlated with skills and qualifications. The relationship appears to be relatively strong for workers in the lower half of the distribution, suggesting that workers with low skill levels have very poor prospects in industries using new technology. If the adoption of new technology is to be further encouraged it may be important to raise the skill levels of workers near the bottom of the distribution.