Computers, Skills and Wages

Abstract

Computer use is mainly associated with skilled, high-wage workers. Furthermore, the introduction of computers leads to upgrading of skill requirements. This suggests that the computer requires certain skills to take full advantage of its possibilities. Empirical findings, however, suggest that the effects of computers on the labor market are complicated and difficult to trace. This paper offers a simple model and new empirical evidence from Britain showing how computers change the labor market. The model shows that wages are an important determinant of computer use and that neither computer skills nor complementary skills seem to be needed to explain skill upgrading. The empirical results are consistent with the model because they indicate that computer use is explained by wages rather than by skills and that wages are not related to computer skills. Keywords: Wage Differentials by Skill; Computer Use and Skill. JEL Classification: J30; J31.education, training and the labour market;