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Productivity, computerization, and skill change

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  • Edward N. Wolff

Abstract

Until recently, most studies examining the effect of computerization on productivity have shown little evidence of a payoff to computer investment in terms of productivity growth. Most of these studies have focused on the connection between information technology (IT) or information and communications technology (ICT) and productivity, but few have examined the linkages between IT and broader indicators of structural change. This article helps fill that gap. ; The article concentrates on the relation of skills, education, and computerization to productivity growth and other indicators of technological change on the industry level. After reviewing the pertinent literature, the author introduces an accounting framework and model and presents descriptive statistics on post-World War II productivity trends and key variables that have shaped productivity growth patterns during that period. A multivariate analysis on the industry level assesses these variables' influence. ; The analysis shows no evidence that the growth of educational attainment has any statistically measured effect on industry productivity growth. The growth in cognitive skills, on the other hand, is significantly related to industry productivity growth though the effect is very modest. In addition, the study finds no econometric evidence that computer investment is positively linked to total factor productivity growth. The author concludes that the effects of IT show up more strongly in terms of measures of structural change rather than in terms of productivity.

Suggested Citation

  • Edward N. Wolff, 2002. "Productivity, computerization, and skill change," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 63-87.
  • Handle: RePEc:fip:fedaer:y:2002:i:q3:p:63-87:n:v.87no.3
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    References listed on IDEAS

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    Cited by:

    1. Mirko Draca & Raffaella Sadun & John Van Reenen, 2006. "Productivity and ICT: A Review of the Evidence," CEP Discussion Papers dp0749, Centre for Economic Performance, LSE.
    2. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The case of the missing productivity growth: or, does information technology explain why productivity accelerated in the United States but not the United Kingdom?," Working Paper Series WP-03-08, Federal Reserve Bank of Chicago.
    3. Hofer, Helmut & Riedel, Monika, 2003. "Computer Use and the Wage Structure in Austria," Economics Series 147, Institute for Advanced Studies.
    4. Danny Leung, 2004. "The Effect of Adjustment Costs and Organizational Change on Productivity in Canada: Evidence from Aggregate Data," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 52-61, Fall.

    More about this item

    Keywords

    Productivity ; Technology ; Information technology ; Employees; Training of;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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