Information Technology and Labor Market Flexibility

The information-based new technologies become central to most aspects of economic activity. But the extent to which information technology creation and diffusion contribute to the labor market performance is still on the controversial. The developed countries characterized by rapid technological advance face high unemployment rates, weak employment growth and rising wage inequalities. In the US and UK etc, workers and confronted by the falling real wages, growing shares of loq wage jobs, sharply growing earinings inequality, and declining job benefits and job security. Workers in continental Europe sugger from the labor market that produced too few jobs. These facts have been explained by 'technology-induced skill mismatch' theory. They argue, the spectacular growth in earings inequality in US and the rising unemployment rates in continental Europe can be accounted for by shifts in demand by employers from low skiiled towards high-skilled workers. Futhermore, this argument has been followed by the more labor market flexibility to utilize the potential of new technologies. I argue, however, that the demand shift alone cannot explain the change of labor maeket. Many employers' 'low-wage human resource strategies' led to the growth of inequality. Also, the improvement in the function of labor market is necessary, but labor market flexibility do not guarantee, in themselves, that the human resource development will suffice to meet the job-creating needs of knowledge-based growth