ICT capital and employment of information workers : are they related ?

This paper examines the relationship between information and communication technology (ICT) related capital assets and employment of information workers in the private non-farm sector of the US economy. The results from our empirical analysis based on annual data for 59 industries from 2002 to 2007 indicate that, after controlling for relative wages of information workers and other industry-specific factors, an increase in net stock of ICT capital assets decreases the employment of information workers. This finding suggests that the effects of ICT capital assets on the employment of information workers through ICT-enabled business process innovations such as automation and outsourcing dominate over the complementarity effects on high-skilled information workers. Of the three main categories of ICT assets, communications equipment provides more definitive evidence of reducing the employment share of information workers.