COMPUTERS HAVE CHANGED THE WAGE STRUCTURE 43 workers,and therefore may have earned higher wages even in the absence of computer technology.Further,the finding that the computer wage differential is attenuated when covariates are included in the OLS regressions suggests that important variables may be omitted that are positively correlated with both computer use and earnings.I have tried four empirical strategies to probe whether the computer pay differential is a real consequence of computer use or is spurious. A.Computer Use at Home and at Work The 1984 and 1989 October CPS surveys collected information on computer use at home as well as at work.This enables a more general specification of the wage equation.In particular,I have estimated parameters of the following log-wage equation: (2) In W=XB+Cwa+Cha2+Cu Cha3 +e, where C is a dummy variable that equals one if a worker uses a computer at work and zero otherwise,Ch is a dummy variable that equals one if a worker uses a computer at home and zero otherwise, and CCh is an interaction term between computer use at home and at work. Workers who possess unobserved characteristics that are associated with computer use at home may be selected by employ- ers to use computers at work on the basis of those same character- istics.In this case,controlling for whether workers use a computer at home would capture at least some of the unobserved heterogene- ity that is correlated with computer use at work.If the positive association between computer use at work and earnings is spuri- ously reflecting a positive correlation between the tendency to use computers and unobserved earnings capacity,one would expect az to be positive and as to be negative.On the other hand,workers with extremely high earnings capacity may use computers at both home and work,so as may be positive.In either case,holding constant the effect of home computer use should reduce any bias in o due to omitted factors that are associated with computer use more generally. Table IV presents OLS estimates of equation(2)using CPS data for 1984 and 1989.The results suggest that computer use at work is the main determinant of earnings,not computer use generally.For example,in 1989 individuals who used a computer for work only earned approximately 18 percent more per hour than those who did not use a computer at all,whereas individuals who used a computer at home only earned 7 percent more than thoseCOMPUTERS HAVE CHANGED THE WAGE STRUCTURE 43 workers, and therefore may have earned higher wages even in the absence of computer technology. Further, the finding that the computer wage differential is attenuated when covariates are included in the OLS regressions suggests that important variables may be omitted that are positively correlated with both computer use and earnings. I have tried four empirical strategies to probe whether the computer pay differential is a real consequence of computer use or is spurious. A. Computer Use at Home and at Work The 1984and 1989 October CPS surveys collected information on computer use at home as well as at work. This enables a more general specification of the wage equation. In particular, I have estimated parameters of the following log-wage equation: where C, is a dummy variable that equals one if a worker uses a computer at work and zero otherwise, C his a dummy variable that equals one if a worker uses a computer at home and zero otherwise, and C, .C his an interaction term between computer use at home and at work. Workers who possess unobserved characteristics that are associated with computer use at home may be selected by employ￾ers to use computers at work on the basis of those same character￾istics. In this case, controlling for whether workers use a computer at home would capture at least some of the unobserved heterogene￾ity that is correlated with computer use at work. If the positive association between computer use at work and earnings is spuri￾ously reflecting a positive correlation between the tendency to use computers and unobserved earnings capacity, one would expect a2 to be positive and a3to be negative. On the other hand, workers with extremely high earnings capacity may use computers at both home and work, so a3 may be positive. In either case, holding constant the effect of home computer use should reduce any bias in al due to omitted factors that are associated with computer use more generally. Table IV presents OLS estimates of equation (2) using CPS data for 1984 and 1989. The results suggest that computer use at work is the main determinant of earnings, not computer use generally. For example, in 1989 individuals who used a computer for work only earned approximately 18 percent more per hour than those who did not use a computer at all, whereas individuals who used a computer at home only earned 7 percent more than those