40 QUARTERLY JOURNAL OF ECONOMICS between computer use and establishment size (e.g.,Hirschorn [1988]).Second,in a recent paper Reilly [1991]uses a sample of 607 employees who worked in 60 plants in Canada in 1979 to investigate the relationship between establishment size and wages. Reilly estimates wage regressions including a dummy variable indicating access to a computer.Without controlling for establish- ment size,he finds that employees who have access to a computer earn 15.5 percent(t=5.7)higher pay.When he includes the log of establishment size,the computer-wage differential is 13.4 percent (t=3.9). Finally,I have estimated the model in column(5)separately for union and nonunion workers.The premium for computer use is 20.4 percent(t =23)in the nonunion sector,and just 7.8 percent (t=4.3)in the union sector.Since unions have been found to compress skill differentials(see Lewis [1986]and Card [1991]),this finding should not be surprising.However,if one believes that the premium for work-related computer use is a result of employees capturing firms'capital rents rather than a return to a skill,it is difficult to explain why the premium is so much larger in the nonunion sector than in the union sector. B.Computer Premium over Time The results in Table II indicate that,if anything,the estimated reward for using a computer at work increased slightly between 1984 and 1989.For example,based on the models in columns(3) and(6),between 1984 and 1989 the computer (log)wage premium increased by 0.022.The standard error of this estimate is 0.011,so the increase is on the margin of statistical significance.There is certainly no evidence of a decline in the payoff for computer skills in this period. This finding is of interest for two reasons.First,given the substantial expansion in the supply of workers who have computer skills between 1984 and 1989,one might have expected a decline in the wage differential associated with computer use at work,ceteris paribus.The failure of the wage differential for computer use to decline suggests that the demand for workers with computer skills may have shifted out as fast as,or faster than,the outward shift in the supply of computer-literate workers.This hypothesis is plausi- ble given the remarkable decline in the price of computers and the expansion in uses of computers in the 1980s. A second reason why the slight increase in the wage differen- tial associated with computer use is of interest concerns the effect40 QUARTERLY JOURNAL OF ECONOMICS between computer use and establishment size (e.g., Hirschorn [1988]). Second, in a recent paper Reilly [1991] uses a sample of 607 employees who worked in 60 plants in Canada in 1979 to investigate the relationship between establishment size and wages. Reilly estimates wage regressions including a dummy variable indicating access to a computer. Without controlling for establish￾ment size, he finds that employees who have access to a computer earn 15.5 percent (t = 5.7) higher pay. When he includes the log of establishment size, the computer-wage differential is 13.4 percent (t = 3.9). Finally, I have estimated the model in column (5) separately for union and nonunion workers. The premium for computer use is 20.4 percent (t = 23) in the nonunion sector, and just 7.8 percent (t = 4.3) in the union sector. Since unions have been found to compress skill differentials (see Lewis [I9861 and Card [19911), this finding should not be surprising. However, if one believes that the premium for work-related computer use is a result of employees capturing firms7 capital rents rather than a return to a skill, it is difficult to explain why the premium is so much larger in the nonunion sector than in the union sector. B. Computer Premium over Time The results in Table I1 indicate that, if anything, the estimated reward for using a computer at work increased slightly between 1984 and 1989. For example, based on the models in columns (3) and (6), between 1984 and 1989 the computer (log) wage premium increased by 0.022. The standard error of this estimate is 0.011, so the increase is on the margin of statistical significance. There is certainly no evidence of a decline in the payoff for computer skills in this period. This finding is of interest for two reasons. First, given the substantial expansion in the supply of workers who have computer skills between 1984 and 1989, one might have expected a decline in the wage differential associated with computer use at work, ceteris paribus. The failure of the wage differential for computer use to decline suggests that the demand for workers with computer skills may have shifted out as fast as, or faster than, the outward shift in the supply of computer-literate workers. This hypothesis is plausi￾ble given the remarkable decline in the price of computers and the expansion in uses of computers in the 1980s. A second reason why the slight increase in the wage differen￾tial associated with computer use is of interest concerns the effect