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Information technology and the U.S. productivity revival: what do the industry data say?

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Kevin J. Stiroh

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Abstract

This paper examines the link between information technology (IT) and the U.S. productivity revival in the late 1990s. Industry-level data show a broad productivity resurgence that reflects both the production and the use of IT. The most IT-intensive industries experienced significantly larger productivity gains than other industries and a wide variety of econometric tests show a strong correlation between IT capital accumulation and labor productivity. To quantify the aggregate impact of IT-use and IT-production, a novel decomposition of aggregate labor productivity is presented. Results show that virtually all of the aggregate productivity acceleration can be traced to the industries that either produce IT or use IT most intensively, with essentially no contribution from the remaining industries that are less involved in the IT revolution.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 115.

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Date of creation: 2001
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Handle: RePEc:fip:fednsr:115

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Keywords: Information technology Industrial productivity Labor productivity

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  10. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Oxford University Press, vol. 36(2), pages 175-91, April.
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  20. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
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  21. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August. [Downloadable!] (restricted)
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  26. Erik Brynjolfsson & Shinkyu Yang, 1997. "Information Technology and Productivity: A Review of the Literature," Working Paper Series 202, MIT Center for Coordination Science. [Downloadable!]
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