Julie L. Hotchkiss, M. Melinda Pitts, and John C. Robertson
Working Paper 2005-11
June 2005

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This paper uses matched employer-employee data for the state of Georgia to examine workers’ earnings experience through the information technology (IT) sector’s employment boom of the mid-1990s and its bust in the early 2000s. The results show that even after controlling for individual characteristics before the sector’s boom, transitioning out of the IT sector to a non-IT industry generally resulted in a large wage penalty. However, IT service workers who transitioned to a non-IT industry still fared better than those who took a non-IT employment path. For IT manufacturing workers, there is no benefit to having worked in tech, likely because of the nontransferability of manufacturing experience to other industries.

JEL classification: J31, J24

Key words: information technology, earnings, employer-employee matched data

The authors gratefully acknowledge Kathryn Shaw and Sabrina Pabilonia for their insightful suggestions as well as Brian Armour, Eric French, Joyce Jacobsen, Robert E. Moore, and Yongsheng Xu. They also thank seminar participants at the University of Colorado-Denver and the University of North Carolina-Greensboro. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to M. Melinda Pitts, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, Georgia 30309-4470, 404-498-7009, melinda.pitts@atl.frb.org; Julie L. Hotchkiss, Research Department, Federal Reserve Bank of Atlanta; or John C. Robertson, Research Department, Federal Reserve Bank of Atlanta.