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 importance 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 larger fraction of high-skilled workers. However, the size of the IT effect on skill intensity is rather small.
demand for high-skilled labor information technology service sector panel data