ICT Use and Labor: Firm-Level Evidence from Turkey

Abstract

This study analyzes the adoption and use of information communication technologies (ICTs) by firms and their effects on employment and wages. I use a confidential data set from Turkey that includes detailed surveys focused on how ICTs and the Internet are used by firms. By using the rich survey data, I create an ICT index summarizing ICT adoption and use, along with the skills of the firms, where each category takes into account many applications. The firms with different levels of ICTs differ in many characteristics. I use the generalized propensity score matching method in order to compare firms that are similar in many dimensions such as industry, location, investments, profits, trade balance, and output. I find positive effects of ICTs on employment and wages that are diminishing after a certain level of ICTs. These significant effects are due to an increase in ICT-generated jobs and not due to an increase in non-ICT jobs in the short-run. The effects on non-ICT employment become significant a couple years after investments in ICTs. This implies a change in the skill composition of the firms with higher intensity of ICT use, especially in the short run.Information communication technologies, skilled-biased technical change, employment