The distinct effects of information technologies and communication technologies on skill demand

Abstract

Covering the bulk of economic activity in ten developed countries over 1982–2005, this paper is the first to study the distinct effects of Information Technologies (IT) and Communication Technologies (CT) on labor, and in particular, the relative demand for different education groups of workers. Consistent with evidence on automation‐induced job and skill polarization, IT capital intensity decreased the demand for the middle‐educated relative to the highly and low‐educated. Instead, CT capital intensity increased the demand for the highly educated relative to the low‐educated, suggesting that CT facilitate the leverage of knowledge by the former group in production teams or the identification of new investment opportunities for their companies. Additional evidence, especially on the effects of CT, yields a richer set of insights.