Technology, wage inequality and the demand for skilled laborOver the past two decades, wage inequality has grown significantly in the UnitedStates. The total effect has been large, as the gap between wages at the 75th percentile of the distribution and the 25th has increased by nearly 50 percentage points. 1 The total effect has also been widespread, shifting relative wages in the top, middle, and bottom of the income distribution. The main cause of the growth in inequality appears to be a shift in the demand for workers of different kinds. Demand is growing for workers with exceptional talent, training, autonomy, and management ability much faster than for workers in low and middle-wage occupations.Parts of this shift in labor demand are explained by such broader economic patterns as globalization, sectoral shifts in employment and changes in labor marketinstitutions. Yet these forces appear too small to explain the breadth and depth of the shift, leaving a large residual shift (Krugman and Lawrence, 1993). Economists have concluded that this residual must reflect a "skill-biased technical change" in the way goods and services are produced in the economy (Griliches, 1969;Berndt, Morrison and Rosenblum, 1992;Berman, Bound and Griliches, 1994). The nature of this technical change are still not well-understood, but its size, breadth, and timing have led many observers to link it to the largest and most widespread technical change of the current era, information technology (see, e.g., Autor, Katz, and Krueger, 1997 and references therein).In this paper, we examine the firm-level evidence for a specific theory of how information technology (IT) could cause skill-biased technical change. In particular, we argue that the effects of IT on labor demand involve far more than simple automation and substitution. Instead, we highlight the central role of IT-enabled organizational change in