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


  • John P. Haisken-DeNew

    (German Institute for Economic Research)

  • Christoph M. Schmidt

    (University of Heidelberg)


The role of the computer at the workplace is examined in determining the wage structure in Germany. It is shown that the wage premium attributed to using a computer at work using cross-sectional results for 1997 is 7%. To control for unmeasured individual effects, we use a random effects and fixed effects estimator. 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.

Suggested Citation

  • 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 0859, Econometric Society.
  • Handle: RePEc:ecm:wc2000:0859

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    References listed on IDEAS

    1. 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.
    2. Brian D. Bell, "undated". "Skill-Biased Technical Change and Wages: Evidence from a Longitudinal Data Se," Economics Papers W25., Economics Group, Nuffield College, University of Oxford.
    3. John E. DiNardo & Jörn-Steffen Pischke, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 291-303.
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    Cited by:

    1. Andy Dickerson & Francis Green, 2002. "The Growth and Valuation of Generic Skills," Studies in Economics 0203, School of Economics, University of Kent.
    2. Hannes Leo, 2001. "European Skills Shortage in ICT and Policy Responses," WIFO Working Papers 163, WIFO.
    3. Falk Martin, 2002. "What Drives the Vacancy Rate for Information Technology Workers? / Was bestimmt den Mangel an IKT-Fachkräften?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 222(4), pages 401-420, August.
    4. Spitz, Alexandra & Bertschek, Irene, 2003. "IT, Organizational Change and Wages," ZEW Discussion Papers 03-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. 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).
    6. Cindy Zoghi & Sabrina Wulff Pabilonia, 2007. "Which workers gain upon adopting a computer?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(2), pages 423-444, May.
    7. Silke Anger & Johannes Schwarze, 2003. "Does Future PC Use Determine Our Wages Today? - Evidence from German Panel Data," LABOUR, CEIS, vol. 17(3), pages 337-360, September.
    8. Marandino, Joaquin & Wunnava, Phanindra V., 2014. "The Effect of Access to Information and Communication Technology on Household Labor Income: Evidence from One Laptop Per Child in Uruguay," IZA Discussion Papers 8415, Institute for the Study of Labor (IZA).
    9. Michael Fertig, 2003. "Who’s to Blame? The Determinants of German Students’ Achievement in the PISA 2000 Study," RWI Discussion Papers 0004, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    10. Falk, Martin, 2001. "What drives the vacancy rate for information technology workers?," ZEW Discussion Papers 01-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Chris N. Sakellariou & Harry A. Patrinos, 2004. "Technology, computers and wages: evidence from a developing economy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(3-4), pages 543-543.
    12. Sabrina Wulff Pabilonia & Cindy Zoghi, 2004. "Which Workers Gain from Computer Use?," Working Papers 373, U.S. Bureau of Labor Statistics.
    13. Haisken-DeNew, John P. & D'Ambrosio, Conchita, 2003. "ICT and Socio-Economic Exclusion," RWI Discussion Papers 3, RWI - Leibniz-Institut für Wirtschaftsforschung.
    14. 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).
    15. Hofer, Helmut & Riedel, Monika, 2003. "Computer Use and the Wage Structure in Austria," Economics Series 147, Institute for Advanced Studies.
    16. 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).
    17. Fertig, Michael, 2003. "Who's to Blame? The Determinants of German Students' Achievement in the PISA 2000 Study," RWI Discussion Papers 4, RWI - Leibniz-Institut für Wirtschaftsforschung.
    18. Daiji Kawaguchi, 2006. "Are Computers At Home A Form Of Consumption Or An Investment? A Longitudinal Analysis For Japan," The Japanese Economic Review, Japanese Economic Association, vol. 57(1), pages 69-86.
    19. repec:zbw:rwidps:0003 is not listed on IDEAS
    20. repec:zbw:rwidps:0004 is not listed on IDEAS
    21. John P. Haisken-DeNew & Conchita D'Ambrosia, 2003. "ICT and Socio-Economic Exclusion," RWI Discussion Papers 0003, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    22. Axel Franzen, 2001. "Wages and the Use of New Technologies: An Empirical Analysis of the Swiss Labor Market," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 137(IV), pages 505-523, December.
    23. Lucas Navarro, 2010. "The Impact of Internet Use on Individual Earnings in Latin America," Development Research Working Paper Series 11/2010, Institute for Advanced Development Studies.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General


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