The impact of computer use on wages in a developing country: evidence from Ecuador

Resumen

This paper examines the wage premium to computer use in a developing country: Ecuador. We use different approaches to establish whether the premium is causal. Controlling for a large set of observables we find a wage difference between users and non-users of around 27%. Using first differences, the premium reduces to around 10%. We find however, no effect of the number of hours of computer use on wages. Moreover, the premium to using pencils is very similar to the computer premium. Groups that earn a higher computer premium also earn a higher pencil premium, and the penalty/gain for losing/winning a computer are almost identical to the penalty/gain of losing/gaining pencils. Taken together, these findings suggest that also in this developing country the computer premium does not reflect a causal impact of computers on productivity, but should be attributed to unobserved worker and/or job characteristics. JEL-codes: Keywords: Computers, wage inequality, developing country, Ecuador