The Internet and Local Wages : Convergence or Divergence?

Did the diffusion of the Internet lead to convergence or divergence of local wages? We examine the relationship between business use of advanced Internet technology and regional variation in US wage growth between 1995 and 2000. We show that business use of advanced Internet technology is associated with wage growth but find no evidence that the Internet contributed to regional wage convergence. Advanced Internet technology is only associated with wage growth in places that were already well off in terms of income, education, population, and industry.Overall, advanced Internet explains one-quarter of the difference in wage growth between these counties and all others