The Daily. Monday, May 6, 2002

Working smarter: The skill bias of computer technologies

Companies that invest heavily in technology generally have employees who are more highly educated than workers in other businesses, according to a new study examining the link between technological investments and the education of employees.

The study, based on data from the 1999 Workplace and Employee Survey (WES), establishes a clear association between investments in computer technology by companies and the educational levels of their work force.

Workers with a university education are more likely to be found in the most technology-intensive workplaces. Conversely, employers with university-educated employees are more likely to invest in computer technology implementations.

Since computer use on the job has expanded so rapidly - doubling from one-third to two-thirds of all workers during the 1990s - the links among computers, training and education could have a large impact on the demand for labour. Some analysts have linked computerization to increasing demand for highly educated or skilled workers, a process termed skill-biased technological change.

Due to rapidly changing computer hardware and software, technological leaders may favour workers who possess the educational credentials that demonstrate they have learned how to learn. This notion is further supported by the elevated training levels observed for more highly educated workers and their greater self-reliance in learning software applications.

Computers now have an enormous presence in Canadian workplaces. In 1999, 70% of Canadian workplaces accounting for 90% of employment had at least one computer user. Moreover, 6 out of 10 workers regularly used a computer on the job, double the proportion of just 3 out of 10 in 1990.

The WES is an ongoing survey of 24,600 employees at 6,300 workplaces. It follows workplaces for at least four years and employees within those workplaces for two years. This unique survey structure enables studies that relate detailed information on employers to detailed information on employees.

Computer investment strongest where employee education levels are highest

The link between education and computer technologies is strongest at the highest levels of educational attainment and computer investments, according to the study.

Highly-educated employees, or those with at least a university degree, were more likely to work in companies that spent more than $2,500 per employee to implement innovations in hardware or software during the previous year.

At the same time, employers with university-educated employees were likely to invest more intensively in new computer technologies.

Note to readers This release is based on a study using data from the 1999 Workplace and Employee Survey (WES). The WES provided detailed information on major hardware and software implementations in workplaces across a broad range of industries covering the 12 months leading up to April 1999. It also contains detailed information on computer use, computer training and other types of training and education of a sample of employees within each of those workplaces. The study available today combines workplace-level technology information with information on the education and training of employees within those workplaces. It adds new observations concerning the micro-level foundations of the skill-biased technological change hypothesis. This hypothesis is grounded in the notion that the increasing prevalence of computer technology is increasing the demand for highly skilled and educated labour relative to lesser skilled and educated labour.

Another indicator of the link between education and computerization is the level of education of employees hired when the hardware or software is being implemented. Individuals newly hired in computer-implementing workplaces had higher levels of education than their co-workers who had worked at the company longer.

Again this relationship was strongest among workplaces that invested at least $2,500 per employee in new computer technologies.

Among workplaces that did not invest in new hardware or software in the previous year, there was no difference in the education levels between longer-serving employees and those newly hired. Thus, the hiring of highly educated employees by computer implementers is not simply a reflection of higher levels of education among labour force entrants.

Computer investment coincides with increased training

The study showed that computer investment is associated with increased computer-related training. This is not surprising since employees need to learn how to use new hardware and software. It also makes sense that highly educated workers should be better able to train themselves. A higher education is probably a good signal to computer-intensive employers that a prospective employee can continue to learn on the job.

But employer-provided computer training is only part of the picture. In fact, just 23% of computer users cited employer-provided formal training as the most important method in learning their main, work-related computer application. Far more employees mentioned self-training (45%) or informal training from co-workers or supervisors (44%) as their most important learning method.

Earlier data from the WES showed that high rates of computer-related training accompanied new hardware and software investment. Looking only at computer users, the computer-training rate was 38% higher in computer-implementing workplaces than in other workplaces.

The reliance on computer self-training was greatest among the highly educated: 57% of university graduates claimed computer self-learning was the most important learning method. The comparable rate for other workers was 40%.

Although this study did establish significant links between computer investments, computer training and employees' education, it did so at a single point in time. To determine the leading factor in the relationship requires that companies and their employees be followed over time. The WES will provide such data in the future.

The study Working smarter: The skill bias of computer technologies, 1999, no. 3, is now available (71-584-MIE, free) from both Statistics Canada's Web site (). From the Our products and services page, choose Free publications and then Labour. The study is also available on the Human Resources Development Canada's Applied Research Branch Web site (www.hrdc-drhc.gc.ca/arb). A paper version (71-584-MPE, $15) will be available soon.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Ted Wannell (613-951-3546), Business and Labour Market Analysis Division, or Howard Krebs (613-951- 4090; fax: 613-951- 4087; labour@statcan.gc.ca), Labour Statistics Division.