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The Internet and Local Wages: Convergence or Divergence?

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  • Chris Forman
  • Avi Goldfarb
  • Shane Greenstein

Abstract

How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business use of advanced internet technology and local variation in US wage growth between 1995 and 2000. We find no evidence that the internet contributed to regional wage convergence. Advanced internet technology is associated with larger wage growth in places that were already well off. These are places with highly educated and large urban populations, and concentration of IT-intensive industry. Overall, advanced internet explains over half of the difference in wage growth between these counties and all others.

Suggested Citation

  • Chris Forman & Avi Goldfarb & Shane Greenstein, 2009. "The Internet and Local Wages: Convergence or Divergence?," NBER Working Papers 14750, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14750
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    Cited by:

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    2. Nikolas Zolas & Zachary Kroff & Erik Brynjolfsson & Kristina McElheran & David N. Beede & Cathy Buffington & Nathan Goldschlag & Lucia Foster & Emin Dinlersoz, 2020. "Advanced Technologies Adoption and Use by U.S. Firms: Evidence from the Annual Business Survey," NBER Working Papers 28290, National Bureau of Economic Research, Inc.
    3. Arthur Grimes & Cleo Ren & Philip Stevens, 2012. "The need for speed: impacts of internet connectivity on firm productivity," Journal of Productivity Analysis, Springer, vol. 37(2), pages 187-201, April.
    4. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2012. "Americans Do IT Better: US Multinationals and the Productivity Miracle," American Economic Review, American Economic Association, vol. 102(1), pages 167-201, February.
    5. Ivan T. Kandilov & Mitch Renkow, 2010. "Infrastructure Investment and Rural Economic Development: An Evaluation of USDA's Broadband Loan Program," Growth and Change, Wiley Blackwell, vol. 41(2), pages 165-191, June.
    6. Michelle Connolly & James Prieger, 2009. "Economics at the FCC, 2008–2009: Broadband and Merger Review," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(4), pages 387-417, December.
    7. Axenbeck, Janna & Breithaupt, Patrick, 2022. "Measuring the digitalisation of firms: A novel text mining approach," ZEW Discussion Papers 22-065, ZEW - Leibniz Centre for European Economic Research.

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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