Trade in Information Technologies and Changes in the Demand for Occupations [WP]

Abstract

I use data from the World Input-Output Database and show that trade in information technologies (IT) has a significant contribution to the growth in foregin intermediate goods in 2001-2014 period. China has become one of the major foregin suppliers of IT and has strongly contributed to the rise in trade in IT. The growth in IT imports from China is associated with lower IT prices in sample European countries. The fall in IT prices has increased the demand for high wage occupations and reduced the demand for low wage occupations. From 20 to 95 percent of the variation in the demand for occupations stemming from the fall in IT prices can be attributed to the trade with China.