How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-89

Abstract

This paper examines whether employees who use a computer at work earn a higher wage rate than otherwise similar workers who do not use a computer at work. The analysis primarily relies on data from the Current Population Survey and the High School and Beyond Survey. A variety of statistical models are estimated to try to correct for unobserved variables that might be correlated with both job-related computer use and earnings. The estimates suggest that workers who use computers on their job earn roughly a 10 to 15 percent higher wage rate. In addition, the estimates suggest that the expansion in computer use in the 1980s can account for between one-third and one-half of the observed increase in the rate of return to education. Finally, occupations that experienced greater growth in computer use between 1984 and 1989 also experienced above average wage growth.