High-Tech Capital Formation and Labor Composition in U.S. Manufacturing Industries: An Exploratory Analysis

Abstract

In this paper we report results of an exploratory empirical effort examining relationships between investments in high-tech information technology capital and the distribution of employment, both by occupation and by level of educational attainment. Our data cover the two-digit U.S. manufacturing industries. annually, 1968-86. We find that increases in the high-tech composition of capital (OF/K) are positively related to growth in white collar. non-production worker hours, and that increases in white collar hours account for most of the reduction in aggregate labor productivity associated with increases in high-tech capital. In terms of educational attainment, within the blue collar occupations we find clear evidence in support of skill upgrading toward more educated workers occurring along with increases in OF/K. While point estimates are not very precise, among white collar occupations we find that hours provided by the least and most educated workers increase with OF/K, while hours provided by those with high-school and some college education are adversely affected.