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February 2002, Vol. 117, No. 1, Pages 339-376

Posted Online March 13, 2006.

(doi:10.1162/003355302753399526)

© 2002 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

The requested content format does not exist for this article. Here is the article's abstract.

Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence*

Timothy F. Bresnahan

Department of Economics, Stanford University

Erik Brynjolfsson

Sloan School of Management, Massachusetts Institute of Technology

Lorin M. Hitt

Wharton School, University of Pennsylvania

We investigate the hypothesis that the combination of three related innovations—1) information technology (IT), 2) complementary workplace reorganization, and 3) new products and services—constitute a significant skill-biased technical change affecting labor demand in the United States. Using detailed firm-level data, we find evidence of complementarities among all three of these innovations in factor demand and productivity regressions. In addition, firms that adopt these innovations tend to use more skilled labor. The effects of IT on labor demand are greater when IT is combined with the particular organizational investments we identify, highlighting the importance of IT-enabled organizational change.

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