Can The Internet Raise The Wage Level?

The Internet sprouted in the late last century, it has been throughout all areas of thesociety and economy. The Internet had a major impact on the traditional economy byreducing production costs and asymmetric information, etc. Domestic scholars have done auseful study on the interaction between the Internet and the economy. The majority of theresearchers found that the Internet had a positive impact on the economy. However, thecurrent research on the impact of the Internet on the wage is still blank.This article was the first to study the impact of the Internet on the wage. Firstly, itanalyzes the way how the Internet affects the wage from5angles, like employment,corporate profits, human capital, trade and social network. Secondly, in order to maintain thedata consistency, we use1999-2008provincial panel data, both from the national andsub-regional level, empirically analyzes the impact of the Internet on the wage, while addingthe quadratic terms of the Internet penetration, considering the nonlinear effects of theInternet on the wage. The empirical results show that no matter from the national orsub-regional perspective, the Internet has presented a nonlinear effect on the wage. And theeffect of the Midwest is larger than the eastern. Thirdly, subject to data limitations, weverified the intermediation between the Internet and the wage, like employment, humancapital and trade. We found that the Internet affects the wage mainly through trade andhuman capital, while the intermediary role of employment is not obvious. Finally, the papercatch up with several suggestions for China’s Internet development, like strengthening theInternet infrastructure of the Midwest, training of highly qualified personnel and establishinga corresponding technical exchanging platform among regions.