E-learning and Labour Market: Wage-premium Analysis

David Castillo Merino,Natàlia Valls Ruiz,Enric Serradell López,Jordi Vilaseca Requena

doi:10.7238/rusc.v5i1.322

Abstract

The link between ICT and the demand for high-skilled labour is due to the fact that the introduction of digital technologies alters the skill requirements of occupations in three main ways (Spitz, 2003): 1) ICT capital substitutes repetitive manual and repetitive cognitive activities, 2) ICT capital is complementary to analytic and interactive activities, and 3) ICT capital increases the requirement for computing skills. Within this framework, we have analysed the determinants of labour productivity of individuals that have taken higher education programmes online to test how occupational skill requirements and the degree of ICT adoption by the industry matches skills of online students. In order to do this, we have assumed an implicit relationship between education and ability (Griliches and Mason, 1972), recognizing that online students may acquire specific skills, such as computing skills and abilities related to ICT use. For the empirical analysis we have used a database of degree students from the UOC (Universitat Oberta de Catalunya). The results from our model based on Mincerian equations show three important facts: 1) schooling is not a significant variable to explain wage differentials; 2) experience, understood as previous productivity and production losses avoided, is the most important variable explaining improvement of wages; and 3) ICT skills have a positive and significant effect on wage levels.

Highlights

International literature provides clear empirical evidence that education leads to major benefits, both for individuals and for society as a whole
These economic benefit estimations are usually based on gross wages across the economy and on the fiscal incomes derived from economic growth of the industry
The increase of individual and social human capital acquired through e-learning provision and e-learning contribution to develop workers’ e-skills may help to reduce skill-biased technological change effects on wages distribution in labour markets

Summary

Introduction

International literature provides clear empirical evidence that education leads to major benefits, both for individuals and for society as a whole. For the society as a whole, the empirical evidence suggests that there is a positive relationship between education (through human capital formation mechanisms) and economic growth (Lucas, 1988; Romer, 1990; de la Fuente and Ciccone, 2002; Jorgenson, Ho and Stiroh, 2005), when technological change is considered (Psacharopoulos and Patrinos, 2004) These economic benefit estimations are usually based on gross wages across the economy and on the fiscal incomes derived from economic growth of the industry. Some authors have tried to identify and quantify educational externalities (Weisbrod, 1964; Havenam and Wolfe, 1984; Heckman and Klenow, 1997; McMahon, 2000; Acemoglu and Angrist, 2000; or Davies, 2002) by three major methods: 1) consumer surplus or welfare improvements, 2) expenditure on related private goods, and 3) hedonic pricing models The results of these studies show that the measure of social spill-overs explains the existence of significant higher returns to investment in education for societies. The increase of individual and social human capital acquired through e-learning provision and e-learning contribution to develop workers’ e-skills may help to reduce skill-biased technological change effects on wages distribution in labour markets

Costs and benefits from education

E-learning skills and productivity: the case of UOC’s degree students

Findings

Results