The returns to computer use in the Chinese labor market

Abstract

With rising wages and increasing maturity of computer technology, computer use in the workplace is becoming increasingly common. Based on data from an urban labor survey, 58 percent of urban workers used computers at work in 2016. Using computer price and density as instrumental variables, we identify the estimation bias from the simultaneous determination of computer use and its productivity effect. We further identify the productivity effect based on computer use frequency. With the above econometric issues taken into account, computer use at work significantly boosts labor productivity and increases workers' wage returns by 48.4 percent.