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Review of the Economics of the Household

This forthcoming review examines the relationship between computer usage, language proficiency, and earnings of immigrants and natives. It analyzes factors such as demand for computer usage, transferability of skills, types of human capital, and the effect of computer usage on earnings. The study utilizes data from the 2001 Australian Census and employs logit and OLS models to measure the probabilities and effects. The findings demonstrate the impact of computers on earnings and highlight the importance of education and language proficiency.

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Review of the Economics of the Household

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  1. Review of the Economics of the Household -- forthcoming COMPUTER USAGE, LANGUAGE PROFICIENCY AND THE EARNINGS OFIMMIGRANTS AND NATIVES by Barry R. Chiswick University of Illinois at Chicago and IZA – Inst. For the Study of Labor Paul W. Miller University of Western Australia 11-24-06 Barry R. Chiswick .

  2. Objectives • Estimate demand for computer usage at home • Determine the interrelation between computer usage and other types of human capital • Estimate the effect of computer usage on earnings Barry R. Chiswick

  3. Immigrant Labor Market Adjustment 2. Transferability of Skills • Between Origin and Destination • Motive for Migrating • Characteristics of Skills • Selectivity of Immigrants • Self-selectivity • Immigration Policy Barry R. Chiswick

  4. Types of Human Capital • Schooling • Labor Market Experience • Information • Language • Health • Migration • Computer Skills Barry R. Chiswick

  5. Computers as a Household Public Good 2. When sum of reservation prices exceeds cost, buy computer 1. Add individual demand curves vertically. Barry R. Chiswick

  6. Data • 2001 Australian Census • Household File • 1% Sample • Males Age 20-64 Barry R. Chiswick

  7. Questions • Did the person use a personal computer at home last week? No ______ Yes______ • Did the person use the Internet anywhere last week? (Mark all applicable boxes) No _______ Yes, at home _______ Yes, at work _______ Yes, elsewhere _____ Barry R. Chiswick

  8. Demand Equation for Computer Use At Home • Price • (Nationwide. Does not vary in cross-section.) • Wealth • No. of bedrooms (+) • No. of cars (+) • Own and Partner’s Traits • Age – experience (+) • cohort effects (-) • Education (+) • Married (+) • Birthplace • Duration • Language (- if not English) • Dependent Children (+) C. Other Relatives (?) Barry R. Chiswick

  9. Computer & Internet Use Adult Males, 2001 Barry R. Chiswick

  10. Computer Usage by Proficiency in Spoken English (percent) Adult Males, 2001 Barry R. Chiswick

  11. Computer Use by NativityExtract from Logit Models Cont’d on next slide….. Barry R. Chiswick

  12. Extract from Logit Models (cont’d) Barry R. Chiswick

  13. Probability of Computer Use by Years of Education Barry R. Chiswick

  14. Probability of Computer Use by Age (or Age at Migration) Barry R. Chiswick

  15. Probability of Computer Use by Years Since Migration Barry R. Chiswick

  16. Earnings Functions by NativityExtract from OLS Models Cont’d on next slide…… Barry R. Chiswick

  17. Extract from OLS Models (cont’d.) Barry R. Chiswick

  18. Earnings Function CoefficientsDependent Variable: Ln Earnings a Foreign-born catch up to native born at about 20 years Barry R. Chiswick

  19. Payoff toComputer Use at Home by Nativity Quantile Regression Barry R. Chiswick

  20. Conclusions • Model computers as a household public good. • Demand for computers increases with: • Own education • Spouse’s education • Married • Own children • Wealth or Permanent Income • English Proficiency • Age (non-monotonic) Barry R. Chiswick

  21. Conclusions (cont’d) • Effects of Computers on Earnings: Native Born 7 percent Foreign Born 13 percent • Positive interaction effect with education and English language ability for Foreign Born • Partial effect is large relative to money cost of computers. Barry R. Chiswick

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