The Effect of the Internet on Wages
Description
Who benefits from the adoption of technology in the workplace? To explore, I combine worker-level wage data with information on broadband adoption by Brazilian firms to estimate the effects of broadband on wages. Overall, wages increase 2.3 percent following broadband adoption. Consistent with the theory of biased technological change, wages increase the most for workers engaged in non-routine cognitive tasks and returns are negative for routine cognitive tasks. There is no effect of broadband adoption on wages for either routine or non-routine manual tasks. Additionally, I estimate the effect of broadband on selected quantiles of the within-firm wage distribution and find evidence that within-firm wage inequality increases following broadband adoption. Both new hires and the firm's existing employees benefit from broadband adoption, which indicates that broadband's effects are not driven only by better recruitment of new employees.
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