RDP 2018-10: Wage Growth Puzzles and Technology 5. Concluding Comments

Overseas studies suggest the increasingly uneven take-up of new technology across firms may help explain labour's declining share of income, weak average productivity growth and rising industry concentration in some countries. This paper has suggested that uneven technology take-up may also help explain surprisingly weak nominal wages growth, and has set out some research proposals designed to test the underlying hypothesis. Recently available firm-level data sources in Australia should facilitate stronger econometric testing and more robust results in all of these areas, centred around a theoretical framework that allows for heterogeneous productivity growth across firms.

Given the growing application of ICT-related investment across different industries and activities and the rapid pace of innovation, the effects of its uneven take-up – including on wages growth – seem likely to increase over time. For that reason as well, this is an area that warrants closer examination.