2.2.2.3IT and Income Inequality

Some authors (Krueger (1993), Autor, Katz and Krueger (1998)) have noticed that along with the tremendous increase in information technology in the United States there took place an alarming increase of income inequality. Indeed, as shown in Figure 2.11, IT accumulation, since the mid 1970s, has paralleled income inequality growth as measured by the Gini coefficient. This fact made researchers wonder about the relationships between high information technology and income inequality. Is it possible that the “new economy” generates higher inequality in income? Figure 2.12, which scatter plots Gini coefficients and IT capital stock at the national level, tends to support this view. Thus, a higher level of IT capital in the United States appears to have been compensated by a higher level of income inequality. However, Figure 2.13 shows that this relationship is less obvious at the state level. Note that a state with a high level of IT capital does not necessarily exhibit higher income inequality. Still, this relationship deserves to be further analyzed.

After reporting some stylized facts about information technology in the United States, some questions arise about the relationships between IT and productivity, as well as various sorts of inequality. The next section summarizes these issues and states the purpose of this dissertation.