Make Money Surfing the Web? The Impact of Internet Use on the Earnings of U.S. Workers

Abstract

Much research on the “digital divide” presumes that adults who do not use the Internet are economically disadvantaged, yet little research has tested this premise. After discussing several mechanisms that might produce differences in earnings growth between workers who do and do not use the Internet, we use data from the Current Population Survey to examine the impact of Internet use on changes in earnings over 13-month intervals at the end of the “Internet boom.” Our analyses reveal robustly significant positive associations between Web use and earnings growth, indicating that some skills and behaviors associated with Internet use were rewarded by the labor market. Consistent with human-capital theory, current use at work had the strongest effect on earnings. In contrast to economic theory (which has led economists to focus exclusively on effects of contemporaneous workplace technology use), workers who used the Internet only at home also did better, suggesting that users may have benefited from superior access to job information or from signaling effects of using a fashionable technology. The positive association between computer use and earnings appears to reflect the effect of Internet use, rather than use of computers for offline tasks. These results suggest that inequality in access to and mastery of technology is a valid concern for students of social stratification.