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Do Computers Make Output Harder to Measure?

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Author Info
Robert H. McGuckin (The Conference Board)
Kevin Stiroh () (Federal Reserve Bank of New York (formerly with The Conference Board))

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Abstract

In recent years, U.S. productivity growth accelerated sharply in manufacturing, but has remained sluggish in the most computer-intensive service industries. This paper explores the possibility that information technology is generating output that is increasingly hard to measure in non-manufacturing industries, which contributes to the divergence in industry productivity growth rates. Our results suggest that measurement error in 13 computer-intensive, non-manufacturing industries increased between 0.74 and 1.57 percentage points per year in the 1990s, which understates annual aggregate productivity growth by 0.10 to 0.20 percentage points in the 1990s. This adds to an estimated 0.22 to 0.30 percentage point error from the increasing share of aggregate output in these hard-to-measure industries. Thus, increasing measurement problems may understate aggregate productivity growth by an additional 0.32 to 0.50 percentage points per year in the 1990s and play an important role in understanding recent productivity trends at the industry level.

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File URL: http://www.conference-board.org/economics/workingpapers.cfm?pdf=E-0002-00-WP
File Format: application/pdf
File Function: First version, 2000
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Publisher Info
Paper provided by The Conference Board, Economics Program in its series Economics Program Working Papers with number 00-02.

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Length: 46 pages
Date of creation: Apr 2000
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Publication status: Published in Journal of Technology Transfer, Vol. 26, No. 4, 2001, pages 295-321.
Handle: RePEc:cnf:wpaper:0002

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Find related papers by JEL classification:
L8 - Industrial Organization - - Industry Studies: Services
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Charles Steindel, 1992. "Manufacturing productivity and high-tech investment," Quarterly Review, Federal Reserve Bank of New York, issue Sum, pages 39-47.
  2. Allen N. Berger & Loretta J. Mester, 1999. "What explains the dramatic changes in cost and profit performance of the U.S. banking industry?," Finance and Economics Discussion Series 1999-13, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  3. Hill, T P, 1977. "On Goods and Services," Review of Income and Wealth, Blackwell Publishing, vol. 23(4), pages 315-38, December.
  4. Martin Neil Baily & Robert J. Gordon, 1988. "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-2), pages 347-432. [Downloadable!]
    Other versions:
  5. James A. Kahn & Jong-Soo Lim, 1998. "Skilled labor-augmenting technical progress in U.S. manufacturing," Staff Reports 47, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  6. Carol Corrado & Lawrence Slifman, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May. [Downloadable!] (restricted)
  7. Jorgenson, D.W. & Stiroh, K., 1994. "Computers abd Growth," Harvard Institute of Economic Research Working Papers 1707, Harvard - Institute of Economic Research.
  8. Surendra Gera & Wulong Wu & Frank C. Lee, 1999. "Information technology and productivity growth: an empirical analysis for Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 384-407, April. [Downloadable!] (restricted)
  9. Joseph H. Haimowitz, 1998. "Has the surge in computer spending fundamentally changed the economy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 27-42. [Downloadable!]
  10. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Oxford University Press, vol. 36(2), pages 175-91, April.
  11. Donald Siegel, 1997. "The Impact Of Computers On Manufacturing Productivity Growth: A Multiple-Indicators, Multiple-Causes Approach," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 68-78, February. [Downloadable!] (restricted)
  12. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD Economics Department. [Downloadable!]
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  13. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  2. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "U.S. Economic Growth at the Industry Level," American Economic Review, American Economic Association, vol. 90(2), pages 161-167, May. [Downloadable!] (restricted)
  3. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2003. "ICT and Productivity in Europe and the United States: Where Do the Differences Come From?," Economics Program Working Papers 03-05, The Conference Board, Economics Program. [Downloadable!]
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