Abstract
This paper investigates the impact which foreign competition, investment in information and communication technologies (ICT) and investment in capital goods other than ICT-related have on the demand for heterogeneous labor. A dynamic interrelated factor demands model serves as the theoretical framework and is estimated by an ordered probit model. Cross-sectional data from a business survey in the service sector are used in the empirical analysis.It turns out that skill-biased technological change is adeterminant of the recent decline in relative demand for lowskilled labor in the business-related services sector.Expected foreign competition positively affects the demandfor unskilled workers and for workers with completed vocationaltraining, while it leaves the demand for the other skill groupsunchanged.
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