College Wage Premium and Computer Use in China

Abstract: This paper explores the impacts of skill-biased technical change measured by computer use on college wage differentials in China over eight years from 2010 onwards. We find that expansion of computer use could significantly increase the college wage premium, especially when controlling industry heterogeneities and geographic factors. This pattern, using dynamic analysis in the long run, is mainly driven by complementary effects between capital structure and skilled workers, namely college educated workers. Moreover, the results are consistent when adopting propensity score matching methods, or in the case of over-education, or adopting alternative measures of technical change and wage earnings.

Key words: college wage premium; skill-biased technical change; computer use

JEL codes: I24, I26, J24, O33