Relative demand for highly skilled workers and use of different ICT technologies

This study investigates the relationship between several indicators of ICT usage and digitalization and the relative demand for highly skilled workers. The data are based on two-digit industry-level information on seven European countries for the period 2001–2010. For manufacturing industries, static fixed-effects models show that the share of employees with internet broadband access, the diffusion of mobile internet access and the use of enterprise resource planning (ERP) systems and automatic data exchange combined with electronic invoicing are all significantly and positively related to skill intensity in the industries observed. For service industries, only mobile internet usage intensity is significant. Specifically for manufacturing, a 10-point increase in the percentage of firms using ERP systems is associated with an increase in the share of highly skilled workers by 0.4 percentage points. These estimates indicate that the increase in ERP system usage during the period studied accounted for 30% of the increase in the share of workers with a tertiary degree across manufacturing industries and countries. The results are robust with respect to the estimation method and the potential endogeneity of ICT.