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Friday, 22 March 2019 05:46
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Internet exacerbates wage inequalities based on existing skills



Enough research exists to show that the digital divide is real, and growing. While an Icrier-Broadband India Forum study showed that a 10% increase in mobile internet traffic leads to a 3.3% increase in GDP, the spoils aren’t evenly spread. A recent piece in The Economist uses academic research to confirm that technology is exacerbating inequality, rather than imports or immigrants. The newspaper cites a working paper by Christopher Poliquin of the University of California, Los Angeles, to show that average wages for firms that had broadband rose around 2.3% more relative to those in firms that did not; while salaries for managers rose 8-9%, executive directors got an 18-19% boost. A previous study, of Norwegian companies, found much the same and, with the internet allowing mundane tasks to be completed faster, staffers put their skills to better use. A research paper by Anders Akerman, Ingvil Gaarder and Magne Mogstad in the Quarterly Journal of Economics analysed US data and found that around two-thirds of the variance in salaries between people was the result of the difference in salaries across firms. So, those working in high-tech firms get higher wages than those working in relatively lower-tech firms—and the wage differences aren’t as great within the same firm—though this, too, is symptomatic of the digital divide since those who are relatively more tech-savvy will get employed in higher-tech firms.


There are important implications for India. The spread of broadband internet has been swift, especially over the last few years since RJio came in, so that promises higher growth in GDP; indeed, as videos and movie-watching gain pace with mobile broadband, it is obvious that GDP will get a boost. But if the gains are to be better dispersed, this means care will have to be taken to ensure the internet is available in as many languages as possible, not just in English and a few others. Also, watching a movie is not quite the same as using the internet in a more productive manner. In which case, it is important to ensure that digital learning is incorporated early enough in all schools. Indeed, for a country like India that has big gaps in education and health outcomes, the internet offers great potential to increase salaries and wages across the board; but, beyond this, it is clear that as technology advances, the digital divide—and the dividends for those on the right side of it—will increase dramatically. A LinkedIn report last year stated that professions that require the use of technology dominated their list of the fastest growing job profiles in the country, and in order to ensure this digital wave is enjoyed and distributed among everyone, efforts towards increasing foundational technological skills need to be prioritised to reduce burgeoning wage inequalities.



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