The Internet and Local Wages: Convergence or Divergence?

64 Pages Posted: 26 Feb 2009 Last revised: 26 Oct 2022

See all articles by Chris Forman

Chris Forman

Cornell University - Charles H. Dyson School of Applied Economics and Management

Avi Goldfarb

University of Toronto - Rotman School of Management

Shane M. Greenstein

National Bureau of Economic Research (NBER); Harvard University - Technology & Operations Management Unit

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Date Written: February 2009

Abstract

How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business use of advanced internet technology and local variation in US wage growth between 1995 and 2000. We find no evidence that the internet contributed to regional wage convergence. Advanced internet technology is associated with larger wage growth in places that were already well off. These are places with highly educated and large urban populations, and concentration of IT-intensive industry. Overall, advanced internet explains over half of the difference in wage growth between these counties and all others.

Suggested Citation

Forman, Chris and Goldfarb, Avi and Greenstein, Shane M. and Greenstein, Shane M., The Internet and Local Wages: Convergence or Divergence? (February 2009). NBER Working Paper No. w14750, Available at SSRN: https://ssrn.com/abstract=1349583

Chris Forman

Cornell University - Charles H. Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Shane M. Greenstein (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

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