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The Effect Of Technology Use On Productivity Growth

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  • Robert H Mcguckin
  • Mary L Streitwieser
  • Mark E Doms

Abstract

This paper examines the relationship between the use of advanced technologies and productivity and productivity growth rates. We use data from the 1993 and 1988 Survey of Manufacturing Technology (SMT) to examine the use of advanced (computer based) technologies at two different points in time. We are also able to combine the survey data with the Longitudinal Research Database (LRD) to examine the relationships between plant performance, plant characteristics, and the use of advanced technologies. In addition, a subset of these plants were surveyed in both years, enabling us to directly associate changes in technology use with changes in plant productivity performance. The main findings of the study are as follows. First, diffusion is not the same across the surveyed technologies. Second, the adoption process is not smooth: plants added and dropped technologies over the six-year interval 1988-93. In fact, the average plant showed a gross change of roughly four technologies in achieving an average net increase of less than one new technology. In this regard, technology appears to be an experience good: plants experiment with particular technologies before deciding to add additional units or drop the technology entirely. We find that establishments that use advanced technologies exhibit higher productivity. This relationship is observed in both 1988 and 1993 even after accounting for other important factors associated with productivity: size, age, capital intensity, labor skill mix, and other controls for plant characteristics such as industry and region. In addition, the relationship between productivity and advanced technology use is observed both in the extent of technologies used and the intensity of their use. Finally, while there is some evidence that the use of advanced technologies is positively related to improved productivity performance, the data suggest that the dominant explanation for the observed cross-section relationship is that good performers are more likely to use advanced technologies than poorly performing operations.

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File URL: ftp://ftp2.census.gov/ces/wp/1996/CES-WP-96-02.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 96-2.

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Date of creation: Apr 1996
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Handle: RePEc:cen:wpaper:96-2

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

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References

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  1. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 253-90, February.
  2. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers, Center for Economic Studies, U.S. Census Bureau 88-2, Center for Economic Studies, U.S. Census Bureau.
  3. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  4. Timothy Dunne & John Haltiwanger & Kenneth R. Troske, 1996. "Technology and Jobs: Secular Changes and Cyclical Dynamics," NBER Working Papers 5656, National Bureau of Economic Research, Inc.
  5. Sabourin, David & Baldwin, John R. & Diverty, Brent, 1995. "Technology Use and Industrial Transformation: Empirical Perspectives," Analytical Studies Branch Research Paper Series 1995075e, Statistics Canada, Analytical Studies Branch.
  6. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
  7. McGuckin, Robert H, 1995. "Establishment Microdata for Economic Research and Policy Analysis: Looking beyond the Aggregates," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 13(1), pages 121-26, January.
  8. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
  9. Griliches, Zvi, 1986. "Economic data issues," Handbook of Econometrics, Elsevier, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 25, pages 1465-1514 Elsevier.
  10. Ron Jarmin, 1993. "Learning By Doing And Competition In The Early Rayon Industry," Working Papers, Center for Economic Studies, U.S. Census Bureau 93-4, Center for Economic Studies, U.S. Census Bureau.
  11. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(4), pages 523-542, December.
  12. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  13. David N. Beede & Kan H. Young, 1996. "Patterns of Advanced Technology Adoption and Manufacturing Performance: Employment Growth, Labor Productivity, and Employee Earnings," Development and Comp Systems 9604001, EconWPA.
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Citations

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Cited by:
  1. Robert H Mcguckin & Bradford J Jensen, 1996. "Firm Performance And Evolution Empirical Regularities In The U.S. Microdata," Working Papers, Center for Economic Studies, U.S. Census Bureau 96-10, Center for Economic Studies, U.S. Census Bureau.
  2. Dolage, D.A.R. & Sade, Abu Bakar & Ahmed, Elsadig Musa, 2010. "The influence of Flexible Manufacturing Technology adoption on productivity of Malaysian manufacturing industry," Economic Modelling, Elsevier, Elsevier, vol. 27(1), pages 395-403, January.
  3. B.K. Atrostic & Kazuyuki Motohashi & Sang Nguyen, 2008. "Computer Network Use and Firms' Productivity Performance: The United States vs. Japan," Working Papers, Center for Economic Studies, U.S. Census Bureau 08-30, Center for Economic Studies, U.S. Census Bureau.
  4. David N. Beede & Kan H. Young, 1996. "Patterns of Advanced Technology Adoption and Manufacturing Performance: Employment Growth, Labor Productivity, and Employee Earnings," Development and Comp Systems 9604001, EconWPA.
  5. Rouben Indjikain & Donald S. Siegel, 2004. "The Impact of Investment in IT on Economic Performance: Implications for Developing Countries," Rensselaer Working Papers in Economics, Rensselaer Polytechnic Institute, Department of Economics 0414, Rensselaer Polytechnic Institute, Department of Economics.
  6. Sang Nguyen & B.K. Atrostic, 2006. "How Businesses Use Information Technology: Insights for Measuring Technology and Productivity," Working Papers, Center for Economic Studies, U.S. Census Bureau 06-15, Center for Economic Studies, U.S. Census Bureau.
  7. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
  8. B.K. Atrostic & John Gates, 2001. "U.S. Productivity and Electronic Processes in Manufacturing," Working Papers, Center for Economic Studies, U.S. Census Bureau 01-11, Center for Economic Studies, U.S. Census Bureau.
  9. 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.
  10. J. Bradford Jensen & Nathan Musick, 1996. "Trade, Technology, and Plant Performance," Industrial Organization, EconWPA 9603004, EconWPA.
  11. Sabourin, David & Baldwin, John R., 2004. "The Effect of Changing Technology Use on Plant Performance in the Canadian Manufacturing Sector," Economic Analysis (EA) Research Paper Series 2004020e, Statistics Canada, Analytical Studies Branch.
  12. B.K. Atrostic & Sang V. Nguyen, 2002. "Computer Networks and U.S. Manufacturing Plant Productivity: New Evidence from the CNUS Data," Working Papers, Center for Economic Studies, U.S. Census Bureau 02-01, Center for Economic Studies, U.S. Census Bureau.
  13. Sang Nguyen & B.K. Atrostic, 2005. "Computer Investment, Computer Networks and Productivity," Working Papers, Center for Economic Studies, U.S. Census Bureau 05-01, Center for Economic Studies, U.S. Census Bureau.
  14. Nathan Musick, 1998. "Heroic Plants: Persistently Rapid Job Creators in the Longitudinal Research Database - Their Distinguishing Characteristics and Contribution to Employment Growth," Industrial Organization, EconWPA 9811001, EconWPA.

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