This analysis of the determinants of firm-level skill intensity is closely related to the approach adopted by Doms et al. (1997). The effect of computer investment on the share of non-production workers are examined and a significantly positive relationship is found. Bresnahan et al. (1999) estimate IT capital demand functions for college-educated workers and professionals based on a panel of 311 US firms. Their findings suggest that IT capital is positively correlated with investments in human capital and workforce skills. It is concluded that skill-IT complementarity is the dominant factor in explaining the demand for skilled labor. While acknowledging that there is a causal relationship running from IT capital to the share of highly skilled technical workers, the analysis is based on the assumption that the skill level of the workforce drives the demand for IT capital. This assumption may be violated, however, in situations where firms hire more skilled labor to efficiently use the previously installed IT capital.
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