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How Information Technology Affects Wages: Evidence Using Internet Usage As a Proxy for IT Skills

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  • ERNEST P. GOSS
  • JOSEPH M. PHILLIPS

Abstract

Many research studies have found a positive link between information technology (IT) in the work place and wages. Using data from the December, 1998 Current Population Survey, we examine the impact of IT, as proxied by on-the-job Internet usage, on wages. After controlling for selectivity bias, we estimate an average wage gain of 13.5 percent for on-the-job Internet usage. This wage advantage is consistent with estimates from studies based on data collected earlier in the 1990s examining the impact of computers in the workplace. We also tested for differences across industries in the manufacturing sector. We conclude that industries marked by less intensive use of technology offered significantly higher wage premiums than industries characterized by more intensive use of technology. This finding undermines the argument that higher wages go to those working in high-tech firms, not to those with high IT skills. We also find evidence that high-tech firms sort workers by skill level, which is also consistent with earlier studies.

Suggested Citation

  • Ernest P. Goss & Joseph M. Phillips, 2002. "How Information Technology Affects Wages: Evidence Using Internet Usage As a Proxy for IT Skills," Journal of Labor Research, Transaction Publishers, vol. 23(3), pages 463-474, July.
    • Handle: RePEc:tra:jlabre:v:23:y:2002:i:3:p:463-474
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    Cited by:

    1. Rimler, Judit, 2003. "Ecset vagy egér. Mesterségbeli tudás és magas szintű technika [Brush or mouse. Occupational capabilities and high technology]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1095-1114.
    2. Monica Răileanu Szeles & Mihaela Simionescu, 2020. "Regional Patterns and Drivers of the EU Digital Economy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(1), pages 95-119, July.
    3. Lissitsa, Sabina & Chachashvili-Bolotin, Svetlana & Bokek-Cohen, Ya'arit, 2017. "Digital skills and extrinsic rewards in late career," Technology in Society, Elsevier, vol. 51(C), pages 46-55.
    4. Barry Chiswick & Paul Miller, 2007. "Computer usage, destination language proficiency and the earnings of natives and immigrants," Review of Economics of the Household, Springer, vol. 5(2), pages 129-157, June.
    5. Edward Wei-Te Hsieh & Rajeev K. Goel, 2019. "Internet use and labor productivity growth: recent evidence from the U.S. and other OECD countries," Netnomics, Springer, vol. 20(2), pages 195-210, December.
    6. David Kaplan & Karen Mossberger, 2012. "Prospects for Poor Neighborhoods in the Broadband Era," Economic Development Quarterly, , vol. 26(1), pages 95-105, February.
    7. Joaquin Marandino & Phanindra V. Wunnava, 2017. "The Effect of Access to Information and Communication Technology on Household Labor Income: Evidence from One Laptop Per Child in Uruguay," Economies, MDPI, vol. 5(3), pages 1-10, September.
    8. Rimler, Judit, 2005. "Számítógép-használat és kreativitás [Computer use and creativity]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 991-1009.
    9. Paul DiMaggio & Eszter Hargittai & Coral Celeste & Steven Shafer, 2003. "From Unequal Access to Differentiated Use: A Literature Review and Agenda for Research on Digital Inequality," Working Papers 29, Princeton University, School of Public and International Affairs, Center for Arts and Cultural Policy Studies..
    10. Díaz, Carlos & Dodel, Matías & Menese, Pablo, 2022. "Can one laptop per child reduce digital inequalities? ICT household access patterns under Plan Ceibal," Telecommunications Policy, Elsevier, vol. 46(9).
    11. Hilal Atasoy & Rajiv D. Banker & Paul A. Pavlou, 2021. "Information Technology Skills and Labor Market Outcomes for Workers," Information Systems Research, INFORMS, vol. 32(2), pages 437-461, June.
    12. Zhang, Fan & Meng, Lei & Sun, Wen & Si, Yanwu, 2021. "Information technology and the labor market in China," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 156-168.
    13. Chiswick, Barry R. & Miller, Paul W., 2005. "Computer Skills, Destination Language Proficiency and the Earnings of Natives and Immigrants," IZA Discussion Papers 1755, Institute of Labor Economics (IZA).

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