The Internet and Local Wages: Convergence or Divergence?
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.
We thank Mercedes Delgado and seminar participants at Arizona State University, Carnegie Mellon University, Hunter College, London School of Economics, Northwestern University, Temple University, University of Arizona, University of Colorado, the University of Toronto, University of Vermont, Washington University, the NBER Productivity Lunch, and WISE 2008 for comments. We also thank Harte Hanks Market Intelligence for supplying data. All opinions and errors are ours alone. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
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