Technical change and earnings in British establishments

Recent empirical studies point to higher wages enjoyed by workers in environments where new technologies are intensively used. An examination of the 1984 and 1990 establishment-based WIRS reveals similar patterns. This paper argues that endogeneity bias is endemic in these results. Controlling for this endogeneity bias suggests that the estimated impact of new technologies on wages is seriously upward-biased. It is more likely that the earnings-technology correlation is driven by the impact of higher earnings on technical change rather than vice versa.