Fox School of Business, Temple University
October 12, 2012
Speakman Hall 200, 1000am – 1100am
Seminar Title : Firm-Level Evidence of the Effects of IT Use on Employment and Labor Wages
This study analyzes the adoption and use of information technology (IT) by firms and their effects on employment and labor wages. Despite the prevalent role of IT in todays economy, the question on whether and how IT contributes to employment and wages has not been addressed in the IS literature. We use IT complementarities, skilled-biased technical change, and lagged-effects of IT theories to derive predictions on the effects of IT use on IT labor and on non-IT labor, respectively. We hypothesize that IT use has direct positive effect on IT labor, and an indirect positive effect on non-IT labor, e ffects that materialize through changes in net output and productivity (value-added per employee). We examine data from Turkey that include detailed information on IT infrastructure, IT applications, and software use, e-commerce and IT outsourcing. Using the generalized propensity score matching and instrumental variables methods to address concerns of endogeneity, our results show positive effects of IT on employment and wages at the rm level. This effect is largely due to an increase in IT jobs in the short-run, implying that IT use has direct immediate effects on IT employment. However, the effects on non-IT employment become significant only with lagged (one- and two-year) eff ects of IT use. This is because the effects of IT on non-IT employment take time to realize through increases in output and productivity. We also find similar lagged-effects of IT on output and productivity. Theoretical and practical implications on the effects of IT on employment and labor wages are discussed along with implications for public policy.