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Overlooking the online world: Does mismeasurement of the digital economy explain the productivity slowdown?

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  • Alejandra Bellatin
  • Stephanie Houle

Abstract

Since the mid-2000s, labour productivity has slowed down in Canada despite enormous technological advances that were expected to improve it. This note investigates whether mismeasurement of the digital economy can explain this paradox.

Suggested Citation

  • Alejandra Bellatin & Stephanie Houle, 2021. "Overlooking the online world: Does mismeasurement of the digital economy explain the productivity slowdown?," Staff Analytical Notes 2021-10, Bank of Canada.
    • Handle: RePEc:bca:bocsan:21-10
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    References listed on IDEAS

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    1. Charles Hulten & Leonard Nakamura, 2017. "Accounting for Growth in the Age of the Internet: The Importance of Output-Saving Technical Change," NBER Working Papers 23315, National Bureau of Economic Research, Inc.
    2. Philippe Aghion & Antonin Bergeaud & Timo Boppart & Peter J. Klenow & Huiyu Li, 2019. "Missing Growth from Creative Destruction," American Economic Review, American Economic Association, vol. 109(8), pages 2795-2822, August.
    3. Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2017. "Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 107(5), pages 322-326, May.
    4. Jeff Mollins & Pierre St-Amant, 2018. "The Productivity Slowdown in Canada: an ICT Phenomenon?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 95-112, Fall.
    5. Austan Goolsbee & Peter J. Klenow, 2006. "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," American Economic Review, American Economic Association, vol. 96(2), pages 108-113, May.
    6. Erik Brynjolfsson & Avinash Collis & Felix Eggers, 2019. "Using massive online choice experiments to measure changes in well-being," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 116(15), pages 7250-7255, April.
    7. Stuart Macdonald & Pat Anderson & Dieter Kimbel, 2000. "Measurement or Management?: Revisiting the Productivity Paradox of Information Technology," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 69(4), pages 601-617.
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    9. Maryam Farboodi & Laura Veldkamp, 2020. "Long-Run Growth of Financial Data Technology," American Economic Review, American Economic Association, vol. 110(8), pages 2485-2523, August.
    10. Chad Syverson, 2017. "Challenges to Mismeasurement Explanations for the US Productivity Slowdown," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 165-186, Spring.
    11. Wendy C.Y. Li & Makoto Nirei & Kazufumi Yamana, 2018. "Value of Data: There’s No Such Thing as a Free Lunch in the Digital Economy," BEA Working Papers 0164, Bureau of Economic Analysis.
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    15. Olena Kostyshyna & Corinne Luu, 2019. "The Size and Characteristics of Informal (“Gig”) Work in Canada," Staff Analytical Notes 2019-6, Bank of Canada.
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    Cited by:

    1. Guyllaume Faucher & Stephanie Houle, 2023. "Digitalization: Definition and Measurement," Discussion Papers 2023-20, Bank of Canada.
    2. Jeffrey Mollins & Temel Taskin, 2023. "Digitalization: Productivity," Discussion Papers 2023-17, Bank of Canada.

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    More about this item

    Keywords

    Productivity;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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