Computers, fax
machines and wages in Canada: What really matters?
by René Morissette
and Marie Drolet
Business and Labour Market Analysis Division
Analytical
Studies Branch research paper series, No. 126
There is currently much debate
about the possibility that technological change has caused the growth of earnings
inequality observed in most OECD countries over the last fifteen years. Specifically,
many analysts argue that the introduction of computers in the workplace has increased
the demand for skilled workers and widened the wage gap between low paid and highly
paid workers. A high profile paper by an American researcher indicated that there
was a 10% to 15% wage premium associated with the use of computer (after controlling
for other observable worker characteristics).
The work reported here used
data from the 1994 General Social Survey to show that:
- about half
of all employees use computers at work,
- employees who use computers receive
higher wages than other employees (after controlling for measurable human capital
characteristics) but
- employees who use fax machines also receive higher
wages than their colleagues.
This latter finding casts doubt on the
validity of the causal relationship between computer use and higher wages. Since
fax machines are unlikely to have altered the wage structure, the positive correlation
between fax machines and wages could simply be due to the fact that fax users
happen to have more unmeasured talents than other workers. Similarly, the positive
correlation between wages and computer use could also reflect the sorting of workers
with more innate abilities into jobs that turn out to have computers. The causal
relationship is not clear, and hence the impact of the introduction of technologies
(i.e. computers) on earnings inequality is not necessarily supported by this research.
Longitudinal data and other analytical techniques are required to more reliably
address this question.
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