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The Impact of Computer Use, Computer Skills and Computer Use Intensity: Evidence from WERS 2004

  • Peter Dolton
  • Panu Pelkonen

Computers and ICT have changed the way we live and work. The latest WERS 2004 provides a snapshot of how using ICT at the workplace has changed our working lives. Various studies have suggested that the use of a computer at work boosted earnings by as much as 20%. Others suggest this reported impact is due to unobserved heterogeneity. Using excellent data from the WERS employer-employee matched data we compare OLS estimates with those from estimations which include controls for establishments, industrial sectors and occupations and use control function, treatment effects models and Instrumental Variable estimation. We show that the results of OLS estimation grossly overestimate the return to computer use but that including occupation controls, reduces the return to between 3-10%. We explore the return on different IT skills and also find a return to the intensity of computer use as measured by the number of tasks a computer is used for.

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File URL: http://cee.lse.ac.uk/ceedps/ceedp81.pdf
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Paper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0081.

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Date of creation: Aug 2007
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Handle: RePEc:cep:ceedps:0081
Contact details of provider: Web page: http://cee.lse.ac.uk/publications.htm

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  1. Peter Dolton & Gerry Makepeace, 2004. "Computer Use and Earnings in Britain," Economic Journal, Royal Economic Society, vol. 114(494), pages C117-C129, 03.
  2. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-50, July.
  3. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
  4. Dolton, Peter & Makepeace, Gerry & Robinson, Helen, 2007. "Use IT or Lose IT? The Impact of Computers on Earnings," IZA Discussion Papers 2588, Institute for the Study of Labor (IZA).
  5. Sabrina Wulff Pabilonia & Cindy Zoghi, 2005. "Returning to the Returns to Computer Use," American Economic Review, American Economic Association, vol. 95(2), pages 314-317, May.
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