The Effect of High-speed Internet Access on the Gender Wage Gap

Abstract

High-speed Internet access is becoming more common and less expensive, but an expanding digital divide has potentially serious implications for existing economic inequalities, such as the wage ratio between men and women. This paper examines the relationship between women's economic outcomes and access to high-speed Internet access. I study the factors that influence predicted wages for men and women and find that high-speed Internet use at home reduces the wage discrimination that a woman is predicted to face. I collected and matched data from the July 2011 Computer and Internet Use Supplement to the Current Population Study and the March 2010 Annual Social and Economic Supplement to the Current Population Study. The dataset was restricted to only include respondents employed full-time and year-round, and aged 16 or older in accordance with previous research analyzing the gender wage gap. I constructed a two-step regression model, which first predicted male wages based on demographic, geographic, and workforce variables. I used the results from the first stage regression to conduct an out-of-sample prediction and derive the residual wage differential attributed to discrimination, which serves as the dependent variable for the second stage regression. The second stage regression included the same demographic, geographic and workforce variables to correct for endogeneity, and added the key policy variable of interest, high-speed Internet use at home. The existence of a relationship between the gender wage gap and high-speed Internet has implications for government policies that seek to expand Internet access and adoption. My research provides an original contribution to the literature on the benefits associated with high-speed Internet use and advocates leveraging limited resources to further expand both access the Internet and to the field of research in this subject area.