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Do Computers Make Output Harder to Measure?

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  • McGuckin, Robert H
  • Stiroh, Kevin J

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 nonmanufacturing industries, which contributes to the divergence in industry productivity growth rates. Our results suggest that measurement error in 13 computer-intensive, nonmanufacturing 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. Copyright 2001 by Kluwer Academic Publishers

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Article provided by Springer in its journal Journal of Technology Transfer.

Volume (Year): 26 (2001)
Issue (Month): 4 (October)
Pages: 295-321

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Handle: RePEc:kap:jtecht:v:26:y:2001:i:4:p:295-321
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Find related papers by JEL classification:
  • L8 - Industrial Organization - - Industry Studies: Services
  • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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Cited by:

  1. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
  2. Kapur, Basant K., 2012. "Progressive services, asymptotically stagnant services, and manufacturing: Growth and structural change," Journal of Economic Dynamics and Control, Elsevier, vol. 36(9), pages 1322-1339.
  3. 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.
  4. Kevin J. Stiroh & Dale W. Jorgenson, 2000. "U.S. Economic Growth at the Industry Level," American Economic Review, American Economic Association, vol. 90(2), pages 161-167, May.
  5. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings 722, Econometric Society.
  6. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers.

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