Technology, Computers and Wages: Evidence from a Developing Economy

Abstract: Increasing returns to schooling and rising inequality are well documented for developed countries and for some developing countries. The growing demand for skills is associated with recent technological developments. It is argued that computers in the workplace represent one manifestation of these changes. Research in the United States and developed countries documents a premium for computer use. However, there is recent evidence suggesting that computer skills by themselves do not command a wage premium. This paper reviews the literature and uses data from a survey of higher education graduates in Vietnam. The results support the unobserved heterogeneity explanation for computer wage premiums. The results suggest that computers may make the productive workers even more productive. However, given the scarcity of computers in low-income countries, an operational strategy of increasing computer availability and skills would seem to offer considerable hope for increasing the incomes of the poor.