A cautionary tale for digital age transitioning: The impeding polarization effects

Jobs are susceptible to computerization depending on the tasks involved. The existing literature documents the impact of computerization on labor market outcomes in highly developed countries and it also raises awareness about the future of IT-saturated societies based on the experience of advanced countries. In 1966, Michael Polanyi observed that “We can know more than we can tell… The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar…” and almost fifty years later David Autor explains how the IT revolution is a cause for an accelerated labor market polarization (a simultaneous increase of jobs requiring high-education and offering a high wage and of jobs requiring low-education and paying a low-wage) as an expression of Polanyi’s paradox. This paper will present, assuming an intensifying IT revolution globally, an overview of the concepts and the empirical results that warn about the possibility that an IT-bounded Romanian labor market where Polanyi’s paradox and the productivity paradox are at work could increase inequality through digital divide, job polarization and wage polarization