Technological Change Promoted Equal Opportunities in the Labour Market

With increasing digitalisation in Germany, the importance of one’s social background for professional success has diminished. In the 1990s, the increasing computerisation of the work environment made it easier for employees whose parents did not have a German high school diploma (“Abitur”) to access jobs that were subject to major technological change. Moreover, their wages in these occupations converged with those of workers whose parents had a high school diploma, as a recent study by ZEW Mannheim shows.

The reason for these developments is that technological change has altered professional requirements. “As a result, the knowledge and networks of parents, which can be advantageous in career advancement, lose importance. In turn, the focus is shifting to the individual skills and qualifications of each worker,” explains Cäcilia Lipowski, one of the study’s authors and a researcher in ZEW’s “Labour Markets and Social Insurance” Department.

In the 1990s, the computerisation of workplaces in Germany advanced rapidly. Whereas in 1992 only 16 per cent of all employees used mainly computer-based devices for their work, in 1999 this figure had more than doubled to 38 per cent. This had a positive effect on equal opportunities: In occupations where employees increasingly use computer-based devices in their work, the share of workers from educationally disadvantaged families rose significantly. This is especially true for higher qualified workers who themselves have a high school diploma: “If computerisation in an occupation increases by ten percentage points – that is, ten percentage points more employees in that occupation use mainly computer-based devices in their work – the proportion of those among the higher-skilled employees whose parents do not have a high school diploma increases by about four percentage points,” Lipowski says.

But the educational background of the parents not only influenced job opportunities, but also wages: Until the early 1990s, the wages of employees from educationally disadvantaged families were between five and ten per cent lower compared to employees whose parents had a high school diploma, depending on their own level of education. The ZEW study shows that this wage disadvantage steadily decreased from the mid-1990s onwards, driven by occupations that underwent strong technological change. For people with a high school diploma, the wage disadvantage even disappeared completely from the early 2000s onwards. “It is remarkable that the wage disadvantage did not increase again in the following years, although the use of computers has become standard practice in many professions,” says Lipowski.