Recent years have brought growing evidence for an increasing labour demand for high
skilled and a deterioration of the labour position of less skilled employees. The two most
common explanations for this finding are an increasing international trade and a skill biased
technological change. Another possible source for this phenomenon, that has received less
attention in the recent discussion, are organizational changes that might affect labour
demand in an asymmetric way, too. This paper analyses the interdependencies between
labour demand for high and low skilled employees, innovation activities and organizational
changes. To this aim mixed simultaneous equation models are estimated using the IAB
establishment dataset collected by the German Federal Employment Office. Our empirical
results indicate that technological change in the form of product innovations increases the
demand for high and reduces the demand for low skilled employees. Organizational changes
on the other hand do not have any significant effect on the labour demand, but are closely
related to innovations.