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Does future PC use determine our wages today? Evidence from German panel data

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  • Anger, Silke
  • Schwarze, Johannes

Abstract

Using 1985-1999 data from the German Socio-Economic Panel Study (GSOEP) to analyze wages we confirm the hypothesis that existing computer wage premiums are determined by individual ability or other unobserved individual characteristics rather than by productivity effects. While a rather large personal computer (PC) wage premium was found in the crosssectional regressions even after the inclusion of standard controls, the conventional longitudinal regression analysis revealed substantially lower or statistically insignificant coefficients, as have other studies. In addition, a new method of testing the two competing explanations for computer wage differentials against each other was found: future PC variables were employed in the wage regressions in order to obtain a further control for worker heterogeneity. The finding that future PC variables have a statistically significant effect on current wages leads one to conclude that computer wage differentials can be attributed to worker heterogeneity rather than to computer-induced productivity. --

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Paper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2002,13.

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Date of creation: 2002
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Handle: RePEc:zbw:sfb373:200213

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Keywords: Computer wage premium; future computer usage; unobserved ability; technological change;

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References

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  1. John P. Haisken-DeNew & Christoph M. Schmidt, 2000. "Money for Nothing and Your Chips for Free? The Anatomy of the PC Wage Differential," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 0859, Econometric Society.
  2. Entorf, Horst & Kramarz, Francis, 1997. "Does unmeasured ability explain the higher wages of new technology workers?," European Economic Review, Elsevier, Elsevier, vol. 41(8), pages 1489-1509, August.
  3. 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.
  4. John E. DiNardo & Jorn-Steffen Pischke, 1996. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," NBER Working Papers 5606, National Bureau of Economic Research, Inc.
  5. Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
  6. Entorf, Horst & Gollac, Michel & Kramarz, Francis, 1999. "New Technologies, Wages, and Worker Selection," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(3), pages 464-91, July.
  7. 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.
  8. Miller, Paul & Mulvey, Charles, 1997. "Computer Skills and Wages," Australian Economic Papers, Wiley Blackwell, Wiley Blackwell, vol. 36(68), pages 106-13, June.
  9. Brian D. Bell, . "Skill-Biased Technical Change and Wages: Evidence from a Longitudinal Data Se," Economics Papers W25., Economics Group, Nuffield College, University of Oxford.
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Cited by:
  1. Benoit Dostie & Mathieu Trépanier, 2004. "Return to Computer Use and Organizational Practices of the firm," Cahiers de recherche 04-06, HEC Montréal, Institut d'économie appliquée.

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