Working Paper: NBER ID: w14750
Authors: Chris Forman; Avi Goldfarb; Shane Greenstein
Abstract: How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business use of advanced internet technology and local variation in US wage growth between 1995 and 2000. We find no evidence that the internet contributed to regional wage convergence. Advanced internet technology is associated with larger wage growth in places that were already well off. These are places with highly educated and large urban populations, and concentration of IT-intensive industry. Overall, advanced internet explains over half of the difference in wage growth between these counties and all others.
Keywords: Internet; Wages; Regional Inequality; Economic Growth
JEL Codes: O33; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advanced internet investment (G24) | larger wage growth (J39) |
| advanced internet investment (G24) | larger wage growth in economically prosperous counties (J39) |
| advanced internet investment (G24) | larger wage growth in counties with high levels of education (J39) |
| advanced internet investment (G24) | larger wage growth in counties with high IT industry concentration (J39) |
| advanced internet investment (G24) | larger wage growth in areas with tight labor markets for skilled workers (J39) |
| advanced internet investment (G24) | wage divergence starting in 1996 (J31) |