Information Technology and the Demand for Educated Workers: Disentangling the Impacts of Adoption versus Use

Abstract

This paper examines the effect of information technology (IT) on the relative demand for educated workers in U.S. industries from 1960 to 1996. After decomposing this effect into IT use and adoption, I find that the use of IT is complementary with educated workers, and that educated workers have a comparative advantage in the adoption of IT. In total, IT use and adoption effects account for almost 40% of the acceleration in demand for educated workers since 1970. Moreover, the adoption of IT explains about one-third of the total IT effect on the acceleration in skill upgrading in the 1970s.