Question

As the topic readings show, IT evolution has resulted in an increased gap between top performing firms and bottom performing firms within industries. Meanwhile, research has also shown a decreasing contribution of labor (vs. capital) to the economic output, which researchers have claimed because of jobs being replaced by technology.

Question: Given the increasingly popular topic of inequality, do you think IT evolution help increase or decrease inequality (either within competitive business market among companies or income/wealth inequality among individuals)? Why? Give some concrete examples of specific technologies to illustrate your point.

Answer 1

IT evolution can increase inequality within companies and among individuals due to shifts in labor demand and productivity. Specific technologies like AI, automation, robotics, and remote work have contributed to this inequality.

Step-by-step explanation:

Information Technology (IT) evolution can increase inequality both within the competitive business market among companies and income/wealth inequality among individuals. In the market for low-wage labor, IT shifts the demand for low-wage labor to the left, reducing its demand due to technology replacing certain jobs and allowing companies to manage connections with low-wage workers in other countries. On the other hand, in the market for high-wage labor, IT shifts the demand to the right, making high-wage labor more productive and overseeing more tasks, resulting in higher wages for these workers.

Examples of specific technologies:

1. Artificial Intelligence (AI) and Automation: AI and automation have replaced manual and repetitive tasks in various industries, reducing the demand for low-wage labor. Examples include self-checkout machines in retail stores and chatbots in customer service.
2. Robotics and Advanced Manufacturing: Robots and advanced manufacturing technologies have increased the efficiency and productivity of high-wage labor in industries like automotive manufacturing. These technologies allow for higher wages for workers who can operate and oversee them.
3. Remote Work and Collaboration Tools: Information technology has enabled remote work and collaboration, providing opportunities for high-wage workers to work from anywhere. This flexibility and accessibility give them an advantage over low-wage workers whose jobs are not easily performed remotely.