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Information and Communication Technologies and Skill Upgrading: the Role of Internal vs External Labour Markets

Author

Listed:
  • Luc Behaghel

  • Eve Caroli

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuelle Walkowiak

Abstract

Following the adoption of information and communication technologies (ICT), firms are likely to face increasing skill requirements. They may react either by training or hiring the new skills, or by a combination of both. We first show that ICT are indeed skill biased and we then assess the relative importance of external and internal labour market strategies. We show that skill upgrading following ICT adoption takes place mostly through internal labour markets adjustments. The introduction of ICT is associated with an upward shift in firms' occupational structure, of which one third is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce, even if this varies across industries.

Suggested Citation

  • Luc Behaghel & Eve Caroli & Emmanuelle Walkowiak, 2011. "Information and Communication Technologies and Skill Upgrading: the Role of Internal vs External Labour Markets," Working Papers hal-04141016, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141016
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141016v1
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    References listed on IDEAS

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    2. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," Working Papers halshs-00646595, HAL.
    3. Fibla Gasparín, Ma. Teresa, 2010. "Staffing strategies in SME's: determinants of external recruitment and internal promotion," Working Papers 2072/179603, Universitat Rovira i Virgili, Department of Economics.
    4. Michele Battisti & Christian Dustmann & Uta Schönberg, 2023. "Technological and Organizational Change and the Careers of Workers," Journal of the European Economic Association, European Economic Association, vol. 21(4), pages 1551-1594.
    5. Mukoyama, Toshihiko & Takayama, Naoki & Tanaka, Satoshi, 2025. "Occupational reallocation within and across firms: Implications for labor market polarization," Journal of Monetary Economics, Elsevier, vol. 150(C).
    6. Behaghel, Luc & Lorenceau, Adrien & Quantin, Simon, 2015. "Replacing churches and mason lodges? Tax exemptions and rural development," Journal of Public Economics, Elsevier, vol. 125(C), pages 1-15.
    7. Avner Ben-Ner & Ainhoa Urtasun & Bledi Taska, 2023. "Effects of New Technologies on Work: The Case of Additive Manufacturing," ILR Review, Cornell University, ILR School, vol. 76(2), pages 255-289, March.
    8. Nicoletti, Giuseppe & von Rueden, Christina & Andrews, Dan, 2020. "Digital technology diffusion: A matter of capabilities, incentives or both?," European Economic Review, Elsevier, vol. 128(C).
    9. Garcia-Canal, Esteban & Rialp-Criado, Alex & Rialp-Criado, Josep, 2013. "Speed of ICT integration strategies in absorptions: Insights from a qualitative study," European Management Journal, Elsevier, vol. 31(3), pages 295-307.

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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