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IT and Beyond: The Contribution of Heterogenous Capital to Productivity

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  • Daniel Wilson

Abstract

This paper explores the relationship between capital composition and productivity using a unique and remarkably detailed data set on firm-level, asset-specific investment in the U.S. Using cross-sectional and longitudinal regressions, I find that among all types of capital, only computers, communications equipment, software, and office building are associated (positively) with current and subsequent years’ multifactor productivity. The link between offices and productivity, however, is shown to be due to the correlation between the use of offices and organizational capital. In contrast, the link between ICT equipment and productivity is robust to a number of controls and appears to be part causal effect and part reflection of the correlation between ICT and firm fixed (or slow-moving) effects. The implied marginal products by capital type are derived and compared to official data on rental prices; substantial differences exist for a number of key capital types. Lastly, I provide evidence of complementaries and substitutabilities among capital types — a rejection of the common assumption of perfect substitutability — and between particular capital types and labor.

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File URL: ftp://ftp2.census.gov/ces/wp/2004/CES-WP-04-20.pdf
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 04-20.

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Length: 60 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:cen:wpaper:04-20

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Keywords: Capital Heterogeneity; Productivity; Investment; Production Function Estimation;

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References

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Citations

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Cited by:
  1. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers, Brandeis University, Department of Economics and International Businesss School 46, Brandeis University, Department of Economics and International Businesss School.
  2. Raquel Ortega-Argilés, 2012. "The Transatlantic Productivity Gap: A Survey Of The Main Causes," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 26(3), pages 395-419, 07.
  3. Sadaf Bashir & Bert Sadowski, 2014. "General Purpose Technologies: A Survey, a Critique and Future Research Directions," Working Papers, Eindhoven Center for Innovation Studies 14-02, Eindhoven Center for Innovation Studies, revised Feb 2014.
  4. Michelle Alexopoulos, 2010. "Read All About it!! What happens following a technology shock?," Working Papers tecipa-391, University of Toronto, Department of Economics.
  5. Daniel Wilson, 2008. "Investment Behavior Of U.S. Firms Over Heterogeneous Capital Goods: A Snapshot," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(2), pages 269-278, 06.
  6. Raquel Ortega-Argilés & Mariacristina Piva & Marco Vivarelli, 2011. "The Transatlantic Productivity Gap: Is R&D the Main Culprit?," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201103, University of Barcelona, Research Institute of Applied Economics, revised Mar 2011.
  7. B. Atrostic, 2008. "Measuring U.S. innovative activity: business data at the U.S. Census Bureau," The Journal of Technology Transfer, Springer, Springer, vol. 33(2), pages 153-171, April.

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