Do Computers Call for Training? Firm-Level Evidence On Complementarities between ICT and Human Capital Investments

This paper explores whether investments in information and communication technologies (ICT) and firm-sponsored training programmes are complementary. Three approaches are applied to panel data from German service companies for the time period 1994-98. Results for a system of interrelated factor demands indicate that training complements ICT but not other capital goods. SYS-GMM estimates of production functions reveal that ICT capital is most productive if complemented by training measures in skill-intensive firms. Comparing the impacts on productivity and wage costs shows that ICT raise the profitability of training high-skilled employees