IT-Based Technical Change and Job Instability

Abstract

We investigate the impact of IT diffusion on the stability of employment. We document the evolution of different components of job instability over a panel of 348 cities in France, from the mid-1970s to the early 2000s. The evidence goes against the view that the diffusion of IT has spurred job instability. Yet, analysing long-term differences in the occupational structure, we find that IT diffusion has increased the share of high-skill occupations at the expense of low-skill occupations. This is consistent with French firms' reliance on their internal labour market to meet the new skill requirements associated with IT diffusion.