Computer Use and the U.S. Wage Distribution, 1984-2003

Federal Reserve Bank of San Francisco Working Paper No. 2006-34

46 Pages Posted: 6 Aug 2007

See all articles by Robert G. Valletta

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

Date Written: October 2006


Given past estimates of wage increases associated with workplace computer use and higher usage rates among more skilled workers, the diffusion of computers has been interpreted as a mechanism for skill-biased technological change and consequent widening of the earnings distribution. I investigate this link by testing for direct effects of rising computer use on the distribution of wages in the United States. Analysis of data from the periodic CPS computer use supplements over the years 1984-2003 reveals that the positive association between workplace computer use and wages declines at higher skill levels, with the notable exception of a higher return to computer use for highly educated workers that emerged after 1997. Over my complete sample frame, however, the net association between rising computer use and the distribution of wages was quite limited. For broad groups defined by educational attainment, rising computer use was associated with rising between-group inequality that was offset by falling within-group inequality, suggesting that computers have exerted a "leveling" rather than a "polarizing" effect on wages.

Keywords: wages, technological change, inequality

JEL Classification: J31

Suggested Citation

Valletta, Robert G., Computer Use and the U.S. Wage Distribution, 1984-2003 (October 2006). Available at SSRN: or

Robert G. Valletta (Contact Author)

Federal Reserve Bank of San Francisco ( email )

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IZA Institute of Labor Economics

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