The Impact Of Information Technology On High-Skilled Labor In Services: Evidence From Firm-Level Panel Data^∗

^∗The initial work for this paper was conducted when the second author was a visiting scholar at the ZEW during the summer of 1998. Financial assistance from the ZEW is gratefully acknowledged. The first author acknowledges financial support from the German Science Foundation's program ‘Industrial Economics and Input Markets’. The authors would like to thank Thomas Bauer. Badi Baltagi. Herbert Buscher, Francois Laisney, Georg Licht, Joachim Moller, Steve Nickell, and Viktor Steiner for their useful comments. Earlier versions of this paper were presented at the 1999 ZEW Summer School Workshop. the 1999 EALE conference in Regensburg and the 1999 Meetings of the Verein fur Sozialpolitik in Mainz We have greatly benefited from comments received at these conferences

Abstract

This paper analyses the link between the high-skilled employment share and the level of investment in information technology (IT) in the service production process. The analysis is based on an unbalanced panel data set for 933 West German firms over the period 1994–1996. To account for firms which do not employ high-skilled labor. proxied by university graduates. fixed and random effects Tobit models are applied. We investigate whether the impoflance of IT varies across subsectors by allowing coefficients to differ across the main service sector industries. The empirical evidence indicates that firms with a higher IT investment to output ratio employ a laier fraction of high-skilled workers. However the size of the IT effect on skill intensity is rather small.

Keywords:

• demand for high-skilled labor
• information technology
• service sector
• panel data

^∗The initial work for this paper was conducted when the second author was a visiting scholar at the ZEW during the summer of 1998. Financial assistance from the ZEW is gratefully acknowledged. The first author acknowledges financial support from the German Science Foundation's program ‘Industrial Economics and Input Markets’. The authors would like to thank Thomas Bauer. Badi Baltagi. Herbert Buscher, Francois Laisney, Georg Licht, Joachim Moller, Steve Nickell, and Viktor Steiner for their useful comments. Earlier versions of this paper were presented at the 1999 ZEW Summer School Workshop. the 1999 EALE conference in Regensburg and the 1999 Meetings of the Verein fur Sozialpolitik in Mainz We have greatly benefited from comments received at these conferences

^∗The initial work for this paper was conducted when the second author was a visiting scholar at the ZEW during the summer of 1998. Financial assistance from the ZEW is gratefully acknowledged. The first author acknowledges financial support from the German Science Foundation's program ‘Industrial Economics and Input Markets’. The authors would like to thank Thomas Bauer. Badi Baltagi. Herbert Buscher, Francois Laisney, Georg Licht, Joachim Moller, Steve Nickell, and Viktor Steiner for their useful comments. Earlier versions of this paper were presented at the 1999 ZEW Summer School Workshop. the 1999 EALE conference in Regensburg and the 1999 Meetings of the Verein fur Sozialpolitik in Mainz We have greatly benefited from comments received at these conferences

Notes

^∗The initial work for this paper was conducted when the second author was a visiting scholar at the ZEW during the summer of 1998. Financial assistance from the ZEW is gratefully acknowledged. The first author acknowledges financial support from the German Science Foundation's program ‘Industrial Economics and Input Markets’. The authors would like to thank Thomas Bauer. Badi Baltagi. Herbert Buscher, Francois Laisney, Georg Licht, Joachim Moller, Steve Nickell, and Viktor Steiner for their useful comments. Earlier versions of this paper were presented at the 1999 ZEW Summer School Workshop. the 1999 EALE conference in Regensburg and the 1999 Meetings of the Verein fur Sozialpolitik in Mainz We have greatly benefited from comments received at these conferences