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

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  • Luc Behaghel
  • Eve Caroli
  • 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," EconomiX Working Papers 2011-4, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2011-4
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    3. 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.
    4. Cyprien Batut & Eric Maurin, 2020. "Termination of Employment Contracts by Mutual Consent and Labor Market Fluidity," IAAEU Discussion Papers 202005, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    5. 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.
    6. Batut, Cyprien & Maurin, Eric, 2019. "From Ultima Ratio to Mutual Consent: The Effects of Changing Employment Protection Doctrine," IZA Discussion Papers 12440, Institute of Labor Economics (IZA).
    7. Antonioli, Davide & Manzalini, Rocco & Pini, Paolo, 2011. "Innovation, workers skills and industrial relations: Empirical evidence from firm-level Italian data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 312-326, May.
    8. Philippe Askenazy & Julien Grenet, 2009. "Les managers français connaissent-ils leurs entreprises ? Les leçons de l’enquête REPONSE," Économie et Statistique, Programme National Persée, vol. 421(1), pages 53-82.
    9. 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).
    10. 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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    More about this item

    Keywords

    Technical change; labour turnover; skill bias; training; internal labour markets;
    All these keywords.

    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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