The Internet and Local Wages: Convergence or Divergence?

51 Pages Posted: 6 Feb 2012

See all articles by Chris Forman

Chris Forman

Cornell University - Dyson School of Applied Economics and Management; Georgia Institute of Technology - Scheller College of Business

Avi Goldfarb

University of Toronto - Rotman School of Management

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit; National Bureau of Economic Research (NBER)

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Date Written: August 15, 2009

Abstract

Did the diffusion of the Internet lead to convergence or divergence of local wages? We examine the relationship between business use of advanced Internet technology and regional variation in US wage growth between 1995 and 2000. We show that business use of advanced Internet technology is associated with wage growth but find no evidence that the Internet contributed to regional wage convergence. Advanced Internet technology is only associated with wage growth in places that were already well off in terms of income, education, population, and industry.

Overall, advanced Internet explains one-quarter of the difference in wage growth between these counties and all others.

Keywords: wage growth, convergence, divergence, information technology, Internet

JEL Classification: O33, R11

Suggested Citation

Forman, Chris and Goldfarb, Avi and Greenstein, Shane M., The Internet and Local Wages: Convergence or Divergence? (August 15, 2009). TPRC 2009. Available at SSRN: https://ssrn.com/abstract=1997781

Chris Forman (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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