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Computer Adoption and Returns in Transition

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  • Kuku, Yemisi

    ()
    (Iowa State University)

  • Orazem, Peter F.

    ()
    (Iowa State University)

  • Singh, Rajesh

    ()
    (Iowa State University)

Abstract

Data from nine transition economies in Central and Eastern Europe are used to examine the role of computer adoption for returns to education. As in western economies, computers are adopted most heavily by young, educated, English-speaking workers with the best access to local telecommunications infrastructures. These same attributes have been associated with rising relative earnings in transition economies. Controlling for likely simultaneity between computer use and labor market earnings, we find much larger returns to individuals from computer adoption than have been found in established market economies. The large returns are explainable by the high cost of adoption and the scarcity of computer skills. As of 2000, only 14% had ever tried a computer. Consequently, despite much larger individual returns, computers are associated with an 8% increase in average incomes in the nine countries.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1360.

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Length: 28 pages
Date of creation: Oct 2004
Date of revision:
Publication status: published in: Economics of Transition, 2007, 15 (1), 33-56
Handle: RePEc:iza:izadps:dp1360

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Keywords: returns; earnings; transition economies; computer adoption; telecommunications;

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  1. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 253-90, February.
  2. Chinn, Menzie D. & Fairlie, Robert W., 2004. "The Determinants of the Global Digital Divide: A Cross-Country Analysis of Computer and Internet Penetration," IZA Discussion Papers 1305, Institute for the Study of Labor (IZA).
  3. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
  4. Easterly, William & Fischer, Stanley, 1995. "The Soviet Economic Decline," World Bank Economic Review, World Bank Group, World Bank Group, vol. 9(3), pages 341-71, September.
  5. Abdulai, Awudu & Huffman, Wallace, 2007. "The Diffusion of New Agricultural Technologies: The Case of Crossbreeding Technology in Tanzania," Staff General Research Papers 12785, Iowa State University, Department of Economics.
  6. Orazem, Peter F & Vodopivec, Milan, 1995. "Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 9(2), pages 201-30, May.
  7. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  8. Huffman, Wallace & Mercier, S., 1991. "Joint Adoption of Microcomputer Technologies: An Analysis of Farmers' Decisions," Staff General Research Papers 10989, Iowa State University, Department of Economics.
  9. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 22(2), pages 397-430, April.
  10. Liu, Jin-Tan & Tsou, Meng-Wen & Hammitt, James K., 2004. "Computer use and wages: evidence from Taiwan," Economics Letters, Elsevier, Elsevier, vol. 82(1), pages 43-51, January.
  11. Harry A. Krashinsky, 2004. "Do Marital Status and Computer Usage Really Change the Wage Structure?," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  12. Oosterbeek, Hessel, 1997. "Returns from computer use: A simple test on the productivity interpretation," Economics Letters, Elsevier, Elsevier, vol. 55(2), pages 273-277, August.
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Cited by:
  1. Vinod Mishra & Russell Smyth, 2012. "Technological Change and Wages in China: Evidence From Matched Employer-Employee Data," Development Research Unit Working Paper Series, Monash University, Department of Economics 28-12, Monash University, Department of Economics.
  2. Ono, Hiroshi & Zavodny, Madeline, 2007. "Immigrants, English Ability and the Digital Divide," IZA Discussion Papers 3124, Institute for the Study of Labor (IZA).

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