Working on the train: trade, technology and wages in Italian manufacturing

This paper investigates the increase in the relative demand for nonmanual workers using a large panel of Italian manufacturing firms over the 1990s. The results indicate that within-firm skill upgrading was the main determinant of this increase, with hightech firms playing a leading role in this process. By contrast, between-firm employment shifts have reduced the relative demand for skills. Firm-level skill upgrading took place on both the extensive margin (employment) and the intensive margin (hours worked), and is significantly related to investment in computers and R&D.