Using 1985–1999 data from the German Socio-Economic Panel Study (GSOEP) to analyze
wages confirms the hypothesis that existing computer wage premiums are determined by
individual ability or other unobserved individual characteristics rather than by productivity
effects. While a rather large personal computer (PC) wage premium was found in the crosssectional
regressions even after the inclusion of standard controls, the conventional
longitudinal regression analysis revealed substantially lower or statistically insignificant
coefficients, as have other studies. In addition, a new method of testing the two competing
explanations for computer wage differentials against each other was found: future PC
variables were employed in the wage regressions in order to obtain a further control for
worker heterogeneity. The finding that future PC variables have a statistically significant
effect on current wages leads one to conclude that computer wage differentials can be
attributed to worker heterogeneity rather than to computer-induced productivity.
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