Information technology and wage disparities between labor groups: An empirical study in Vietnam

Abstract

The world is undergoing rapid transformation, propelled by groundbreaking advancements in science and technology. Within this dynamic and ever-evolving landscape, the advent of the Fourth Industrial Revolution, often referred to as Industry 4.0, has significantly extended the boundaries of human existence. This era is marked by the seamless integration of physical and digital realms, which are primarily driven by two pivotal elements: data and connectivity. As industries increasingly rely on digital technologies, the workplace is being redefined, and workers are required to adapt to these changes. Embracing artificial intelligence and related technologies in the workplace can empower the workforce of the 4.0 era, enabling them to drive heightened productivity, achieve their desired income levels, and and reduce economic economic disparities. This study aims of this study is to investigate wage differentials between two distinct labor groups: those utilizing information technology (IT) in their work and those who do not. Specifically, it seeks to understand whether adopting IT-related skills can bring workers tangible financial benefits for workers. Using data from the Labor Force Survey (LFS), the study employs both the Oaxaca-Blinder decomposition and quantile regression methods to understand wage disparities across different income levels comprehensively. The study's findings of the study highlight that, beyond traditional wage determinants such as education, qualifications, and gender, the use of IT significantly impacts workers' earnings. Employees who leverage IT in their job roles tend to command higher wages. Furthermore, the study reveals that income inequality is notably reduced among workers who utilize IT, indicating that IT is crucial in promoting both individual wage growth and a more equitable income distribution.