Fahmida Khatun1

Syed Yusuf Saadat2

ABSTRACT

In the highly competitivelabour market of Bangladesh,workers are unable to find theright jobs and employers arealso unable to find the rightworkers. Such skills mismatchis a manifestation thateducation alone cannot bridgethe gaps in the labour market.Computer skills, which cancomplement education, arebecoming increasinglyimportant. Nevertheless, thereis a dearth of researchregarding the potential benefitof possessing computer skills inthe labour market ofBangladesh. This paper intendsto fill in this knowledge gap byestimating the returns tocomputer use using a nationallabour force survey dataset. Byutilizing Heckman’s two-stepselection model, it was foundthat workers who could usecomputers earned 17 per centmore than workers who couldnot use computers.Additionally, the returns toeducation and experience wereestimated to be 3 per cent and 2per cent respectively. Thisimplies that computer skillswere as valuable as 5 years ofeducation or 8 years ofexperience, assuming that thereturns to all three wereconstant over time. The resultsof this study provide empiricalevidence in favor of allocatinggovernment resources forcomputer training, and alsoadvocate for individualinvestment towards learningcomputer skills.

THE PROBLEMATIQUE

cpdbd

1 Executive Director, Centre for Policy Dialogue (CPD)2 Research Associate, Centre for Policy Dialogue (CPD

RETURNS TO COMPUTER USE IN BANGLADESH: AN ECONOMETRIC ANALYSIS

cpd.org.bd CPDBangladesh

Centre for Policy Dialogue (CPD)

syedyusufsaadat syedyusufsaadat

Syed Yusuf Saadat

96

67

4

33

020406080

100

Do not have computer Have computer

Per

cent

Computer ownership and computer use (in percentage)

Never used computer Used computer

Wages

Region

Never used computer (in BDT)

Used computer (in BDT)

Wage differential (in %)

Barishal 11,343 15,731 38.68Chattogram 11,217 14,358 28.00Dhaka 10,881 14,788 35.91Khulna 10,709 13,122 22.53Rajshahi 10,620 13,425 26.41Rangpur 10,264 13,551 32.02Sylhet 10,320 13,401 29.85Rural 10,287 12,925 25.64Urban 11,254 14,434 28.26National 10,812 14,162 30.98

010203040506070

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

Per

cent

Year

Sector-wise employment (as percentage of total employment) in Bangladesh (1991-2017)

Agriculture Industry Services

Rural Agricultural

Sector Urban Industrial

Sector

Rural Agricultural

Sector

Urban Industrial

Sector

Less DevelopedEconomy

DevelopedEconomyStructural Change

Market wage model specification

ln  (𝑊&) = 𝑏* + 𝑏,𝑆& + 𝑏.𝐸& +𝑏0 𝐸&. +𝑏1 𝐶& + 𝑢& (𝑖)

Education

WR

WM(est.)

WM(true)

OBSERVED

UNOBSERVED

WM

Sample selection bias

Labor force participation model specification

𝑙𝑛(𝑊&∗) = 𝛽* + 𝛽,ℎ& + 𝛽.𝐴𝑖 + 𝛽0𝑀& + 𝛽1𝐾& + 𝛽=𝑃& + 𝜀&(𝑖𝑖)

Selection bias corrected model specification

𝑙𝑛(𝑊&) = 𝑏* + 𝑏,𝑆& + 𝑏.𝐸& + 𝑏0𝐸&. + 𝑏1𝐶& + 𝑏=𝜆& + 𝑢&(iii)

THE RESULTSModel without computer Model with computer

Regression Probit Heckman Probit HeckmanVariable lnwage lnwage lnwage lnwageeducation 0.0343*** 0.0302***

(0.0010) (0.0010)experience 0.0198*** 0.0203***

(0.0007) (0.0007)experience2 -0.0002*** -0.0002***

(0.0000) (0.0000)computer 0.1702***

(0.0123)hours 0.0107*** 0 .0107***

(0.0005) (0.0005)assets -0.0003*** -0.0003***

(0.0000) (0.0000)married -0.3196*** -0.3196***

(0.0171) (0.0171)children -0.0234** -0.0234**

(0.0096) (0.0096)CPI -0.0415*** 6.9558***

(0.0024) (0.4395)lambda -0.1805 -0.1558

(0.0128) (0.0133)Constant 6.9558*** 7.4804*** 6.9558*** 7.4678***

(0.4395) (0.0181) (0.4395) (0.0182)LR chi2 1730.34 1730.34Wald chi2 1794.51 2030.21Prob > chi2 0.0000 0.0000 0.0000 0.0000

THE APPROACH

0

20

40

60

80

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Per

cent

Years

Returns to education, experience, and computers

Returns to education (cumulative)Returns to experience (cumulative)Returns to computer use

17%

https://cpd.org.bd