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 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.
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Keywords: Computers, wage inequality, developing country, Ecuador