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Technology and the Demand for Skill: An Analysis of Within and Between Firm Differences

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Author Info
John M. Abowd () (Cornell University, U.S. Census Bureau, CREST, NBER and IZA)
John Haltiwanger () (University of Maryland, U.S. Census Bureau, NBER and IZA)
Julia Lane () (NORC, University of Chicago and IZA)
Kevin L. McKinney () (LEHD, U.S. Census Bureau)
Kristin Sandusky () (LEHD, U.S. Census Bureau)

Additional information is available for the following registered author(s):

Abstract

We estimate the effects of technology investments on the demand for skilled workers using longitudinally integrated employer-employee data from the U.S. Census Bureau’s Longitudinal Employer-Household Dynamics Program infrastructure files spanning two Economic Censuses (1992 and 1997). We estimate the distribution of human capital and its observable and unobservable components within each business for each year from 1992 to 1997. We measure technology using variables from the Annual Survey of Manufactures and the Business Expenditures Survey (services, wholesale and retail trade), both administered during the 1992 Economic Census. Static and partial adjustment models are fit. There is a strong positive empirical relationship between advanced technology and skill in a crosssectional analysis of businesses in both sectors. The more comprehensive measures of skill reveal that advanced technology interacts with each component of skill quite differently: firms that use advanced technology are more likely to use high-ability workers, but less likely to use high-experience workers. These results hold even when we control for unobservable heterogeneity by means of a selection correction and by using a partial adjustment specification.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2707.

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Length: 43 pages
Date of creation: Mar 2007
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Handle: RePEc:iza:izadps:dp2707

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Related research
Keywords: technology; demand for skill; matched employer-employee data; older workers;

Other versions of this item:

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Joseph Kaboski & Trevon D. Logan, 2007. "Factor Endowments and the Returns to Skill: New Evidence from the American Past," NBER Working Papers 13589, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Aubert Patrick & Caroli Eve & Roger Muriel, 2005. "New Technologies, Workplace Organisation and the Age Structure of the Workforce: Firm-Level Evidence," Research Unit Working Papers 0505, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
    Other versions:
  3. Rikke Ibsen & Elisabetta Trevisan & Niels Westergaard-Nielsen, 2008. "Job Mobility and Skill Transferability. Some Evidences from Denmark and a Large Italian Region," Working Papers 2008_40, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
  4. Ardiana N. Gashi & Geoff Pugh & Nick Adnett, 2008. "Technological change and employer-provided training: Evidence from German establishments," Economics of Education Working Paper Series 0026, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  5. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada. [Downloadable!]
  6. Sandrine Levasseur, 2008. "Progrès technologique et employabilité des seniors," Documents de Travail de l'OFCE 2008-16, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  7. Langot, François & Moreno-Galbis, Eva, 2008. "Does the Growth Process Discriminate against Older Workers?," IZA Discussion Papers 3841, Institute for the Study of Labor (IZA). [Downloadable!]
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