The Impact of Computer Use, Computer Skills and Computer Use Intensity: Evidence from WERS 2004.

Computers and ICT have changed the way we live and work. The latest WERS 2004 provides a snapshot of how using ICT at the workplace has changed our working lives. Various studies have suggested that the use of a computer at work boosted earnings by as much as 20%. Others suggest this reported impact is due to unobserved heterogeneity. Using excellent data from the WERS employer-employee matched data we compare OLS estimates with those from estimations which include controls for establishments, industrial sectors and occupations and use control function, treatment effects models and Instrumental Variable estimation. We show that the results of OLS estimation grossly overestimate the return to computer use but that including occupation controls, reduces the return to between 3-10%. We explore the return on different IT skills and also find a return to the intensity of computer use as measured by the number of tasks a computer is used for.