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What's Spurious, What's Real? Measuring the Productivity Impacts of ICT at the Firm-Level

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  • Hempell, Thomas
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    Abstract

    In order to assess the productivity effects of information and communication technologies (ICT), regressions based on cross?sectional firm?level data may yield unreliable results for the commonly employed production function framework. In this paper, various estimation biases and econometric strategies to overcome their sources are discussed. The effects are illustrated on the basis of a representative set of panel data for German service firms. The application of a suited SYS?GMM estimator yields evidence for significant productivity effects of ICT which are substantially smaller though than those suggested by cross?section or pooled OLS estimates. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 02-42.

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    Date of creation: 2002
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    Handle: RePEc:zbw:zewdip:676

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    Keywords: Productivity; Information and Communication Technologies; Production Function Estimation; Panel Data; Services;

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    1. Erik Brynjolfsson & Lorin Hitt, 1996. "Paradox Lost? Firm-Level Evidence on the Returns to Information Systems Spending," Management Science, INFORMS, vol. 42(4), pages 541-558, April.
    2. S. Black & L. Lynch, 1997. "How to compete: the impact of workplace practices and information technology on productivity," LSE Research Online Documents on Economics 20298, London School of Economics and Political Science, LSE Library.
    3. Jacques Mairesse & Nathalie Greenan & Agnes Topiol-Bensaid, 2001. "Information Technology and Research and Development Impacts on Productivity and Skills: Looking for Correlations on French Firm Level Data," NBER Working Papers 8075, National Bureau of Economic Research, Inc.
    4. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February.
    5. Licht, Georg & Moch, Dietmar, 1997. "Innovation and Information Technology in Services," ZEW Discussion Papers 97-20, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
    7. Bill Lehr & Frank Lichtenberg, 1999. "Information technology and its impact on firm-level productivity: evidence from government and private data sources, 1977-1993," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 335-362, April.
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    13. Brynjolfsson, Erik. & Hitt, Lorin M., 1994. "Information technology as a factor of production : the role of differences among firms," Working papers 3715-94. CCSTR ; #173., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    14. P. Biscourp & B. Crépon & T. Heckel & N. Riedinger, 2002. "How do firms respond to cheaper computers? Microeconometric evidence for France based on a production function approach," Documents de Travail de la DESE - Working Papers of the DESE g2002-05, Institut National de la Statistique et des Etudes Economiques, DESE.
    15. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
    16. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    17. Bertschek, Irene & Kaiser, Ulrich, 2001. "Productivity effects of organizational change: microeconometric evidence," ZEW Discussion Papers 01-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    18. 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.
    19. Jorgenson, D.W. & Stiroh, K., 1994. "Computers abd Growth," Harvard Institute of Economic Research Working Papers 1707, Harvard - Institute of Economic Research.
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