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

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 andnon-users of around 27%. Using first differences, the premium reduces to around10%. 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 thepenalty/gain of losing/gaining pencils. Taken together, these findings suggest thatalso in this developing country the computer premium does not reflect a causal impactof computers on productivity, but should be attributed to unobserved workerand/or job characteristics.JEL-codes:Keywords: Computers, wage inequality, developing country, Ecuador