Information And Communication Technologies And Skill Upgrading: The Role Of Internal Vs External Labour Markets
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. The authors first show that ICT are indeed skill biased and they then assess the relative importance of external and internal labour market strategies. They 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.