The Impact of Computer Use On Earnings in the UK

Abstract

The effect of new technology on relative demands for workers has been the subject of much research in economics. Krueger (1993) and others have studied the impact of computers on earnings in the US and elsewhere. Such studies have been criticised for ignoring the possibility of bias due to unobserved heterogeneity between computer users and non-users, resulting in computer users not being a random subsample of all workers. As well as looking at the effects of computers on earnings in the UK, this paper extends previous analyses by using a sample selection framework to deal with the bias problem. Results indicate not only that returns to computer use are positive but that it is important to correct for the sample selection bias. I IntroductionOne of the most phenomenal changes of technology in the twentieth century was in the field of computers.1 Since the early fifties, when the Univac Division of Remington Rand built the first commercial computer, both the industry and the product have undergone considerable changes. In the early periods IBM held a near monopoly in mainframe computers and a large share of the market in most other types of computers. The late 1970s and early 80s saw a revolution in this industry, with the expansion of the market in the mini and personal computer segments and the entry of hundreds of firms producing clones. The impact on the industry of such severe competition has been a reduction in the 4-firms concentration ratio to 44% of the market.2 The impact on the product has been a tremendous increase in speed, storage capacity and handling complex data, accompanied by reduction in price. A study by Berndt and Griliches (1993) estimated a reduction of 28% in the price of computers in the US between 1982 and 1988, after adjusting for quality.

The Association between IT Related Trainings and IT Investments in Malaysia

“…The data served the expansion of the view that IT related trainings can be viewed as an important element in impacting IT investments as discussed by several prior studies which indicate that IT investments are often associated with increased in training effort (Bartel et al, 1987;Laudon & Laudon, 1998;Brynjolfosson & Hitt, 1998;Bartel & Sicherman, 1998;Arabsheibani et al, 2004;Loo et al, 2005;Moriones & Lopez, 2007). Through effective IT related trainings applied to all employees, it appears to predict IT investments.…”

“…Since IT investments involve the high provision (Khor, 1999), employees must have sufficient IT skills (Brynjolfsson and Hitt, 1998;Arabsheibani et al, 2004;Moriones & Lopez, 2007) so that it will increase productivity as well as provide good returns to the organizations (Bates, Holton & Seyler, 1996). Therefore, the management of organization plays an important role in providing more IT trainings to enhance the IT skills of the employees (Baldwin et al, 2004).…”

“…The rapid changes of information technology show that organizations invest more in training for their employees in response to the new technology they invested in order to make changes in its management of corporate technology (Brynjolfsson & Hitt, 2000). The rapid growth of IT usage today has been associated with a variety of changes to their internal processes, such as organizational structure, job design, and requisite employee skills for the purpose of improving the quality of management (Arabsheibani et al, 2004;Moriones and Lopez, 2007).…”

Computers and Pay

“…Arabsheibani et al (2004) using 1980s data from the British Social Attitudes Survey, found large returns (22% to 26%), rising to a surprising 37% when seemingly taking account of selection. Arabsheibani and Marin (2006), however, using the 5 th sweep of the National Child Development Study (NCDS) in 1991, report lower estimates ranging from 7 to 17%.…”

The Effect of Access to Information and Communication Technology on Household Labor Income: Evidence from One Laptop Per Child in Uruguay

“…Using the National Longitudinal Survey of Youth for the years 2000, and 2006, Danyal et al (2011 implement a fixed-effects model and find that individuals possessing computer skills (defined as having a personal computer at home) earn a 4.8% wage premium. Arabsheibani et al (2004) use data from the British Social Attitudes Survey for 1985 and 1990 and implement the Heckit technique to correct for selectivity bias. Their results show that two-thirds of the wage differential between computer users and non-users is explained by computer use.…”