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Money for Nothing and Your Chips for Free?: The Anatomy of the PC Wage Differential

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  • John P. Haisken-DeNew
  • Christoph M. Schmidt

Abstract

In this paper, the role of the computer at the workplace will be examined in determining the wage structure in Germany. Following Krueger (1993) and using the German Socio-Economic Panel (GSOEP), cross-sectional wage regression results from 1997 and panel results from 1984-1997 are presented. It is shown that the wage premium attributed to using a computer at work using cross-sectional results for 1997 is around 7%. Further it is shown that computer usage is very heterogeneous depending on which industry one works in. In cross-section, hypothesis tests show that several industries and almost all firm size categories exhibit very different wage differentials depending on computer usage at the workplace. As DiNardo and Pischke (1997) stress the need for panel data to control for unmeasured individual effects, we use GSOEP 1984-1997 panel data, where a random effects and fixed effects estimator were run in the wage estimation. We confirm the results that Entorf and Kramarz (1997) had for France, that in Germany the coefficient for computer usage at the workplace did not remain stable and although just barely significant, was reduced to mere 1% with individual fixed effects. We conclude that there are no computer usage wage differentials worth speaking of, once one controls adequately for unobserved individual heterogeneity.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38514.de/dp178.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 178.

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Length: 17 p.
Date of creation: 1999
Date of revision:
Handle: RePEc:diw:diwwpp:dp178

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Keywords: Computer Wage Premium; Skill-Biased Technological Change; Inter-Industry Wage Di erentials; Germany.;

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References

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  1. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 291-303, February.
  2. Brian D. Bell, . "Skill-Biased Technical Change and Wages: Evidence from a Longitudinal Data Se," Economics Papers, Economics Group, Nuffield College, University of Oxford W25., Economics Group, Nuffield College, University of Oxford.
  3. John P. Haisken-DeNew & Christoph M. Schmidt, 2000. "Interindustry and Interregion Differentials: Mechanics and Interpretation," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 516-521, August.
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Cited by:
  1. Fertig, Michael, 2003. "Who's to Blame? The Determinants of German Students' Achievement in the PISA 2000 Study," IZA Discussion Papers 739, Institute for the Study of Labor (IZA).
  2. Falk, Martin, 2001. "What drives the vacancy rate for information technology workers?," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 01-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Sabrina Wulff Pabilonia & Cindy Zoghi, 2004. "Which Workers Gain from Computer Use?," Working Papers, U.S. Bureau of Labor Statistics 373, U.S. Bureau of Labor Statistics.
  4. Green, Francis & Andy Dickerson, 2003. "The Growth and Valuation of Generic Skills," Royal Economic Society Annual Conference 2003, Royal Economic Society 91, Royal Economic Society.
  5. Hannes Leo, 2001. "European Skills Shortage in ICT and Policy Responses," WIFO Working Papers, WIFO 163, WIFO.
  6. Silke Anger & Johannes Schwarze, 2003. "Does Future PC Use Determine Our Wages Today? - Evidence from German Panel Data," LABOUR, CEIS, CEIS, vol. 17(3), pages 337-360, 09.
  7. Cindy Zoghi & Sabrina Wulff Pabilonia, 2007. "Which workers gain upon adopting a computer?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 40(2), pages 423-444, May.
  8. Chris N. Sakellariou & Harry A. Patrinos, 2004. "Technology, computers and wages: evidence from a developing economy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, ULB -- Universite Libre de Bruxelles, vol. 47(3-4), pages 543.
  9. Hofer, Helmut & Riedel, Monika, 2003. "Computer Use and the Wage Structure in Austria," Economics Series, Institute for Advanced Studies 147, Institute for Advanced Studies.
  10. Spitz, Alexandra & Bertschek, Irene, 2003. "IT, Organizational Change and Wages," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 03-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Bauer, Thomas K. & Bender, Stefan, 2001. "Flexible Work Systems and the Structure of Wages: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 353, Institute for the Study of Labor (IZA).
  12. Lucas Navarro, 2010. "The Impact of Internet Use on Individual Earnings in Latin America," Development Research Working Paper Series, Institute for Advanced Development Studies 11/2010, Institute for Advanced Development Studies.
  13. Fertig, Michael & Schmidt, Christoph M., 2000. "Discretionary Measures of Active Labor Market Policy: The German Employment Promotion Reform in Perspective," IZA Discussion Papers 182, Institute for the Study of Labor (IZA).
  14. John P. Haisken-DeNew & Conchita D'Ambrosia, 2003. "ICT and Socio-Economic Exclusion," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0003, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  15. Michael Fertig, 2003. "Who’s to Blame? The Determinants of German Students’ Achievement in the PISA 2000 Study," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0004, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.

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