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The Link between Technology Use, Human Capital, Productivity and Wages: Firm-level Evidence

Author

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  • Julie Turcotte

    ()

  • Lori Whewell Rennison

    ()

Abstract

Arguably the most important development in the Canadian workplace in recent years has been the massive introduction of information and communications technologies (ICT). The impact of this development on a range of variables, including productivity and wages, are manifold, but are still poorly understood. Julie Turcotte and Lori Whewell Rennison of Finance Canada examine the effects of education, training and technology use on productivity and wages at the firm level. They make innovative use of Statistics Canada’s Workplace and Employee Survey, which allows the linking of the characteristics of workers in a firm to firm performance measures. They find that productivity is higher: the more intensively technology is used in the firm; the greater the proportion of university educated workers; the greater the participation of workers in formal training programs; the greater the proportion of workers who receive computer training; and the greater the firm’s export orientation. A key finding with important policy implications is that computer skills training can augment the qualifications of lower-skilled workers and consequently boost firm productivity.

Suggested Citation

  • Julie Turcotte & Lori Whewell Rennison, 2004. "The Link between Technology Use, Human Capital, Productivity and Wages: Firm-level Evidence," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 25-36, Fall.
  • Handle: RePEc:sls:ipmsls:v:9:y:2004:3
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    References listed on IDEAS

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    1. Sandra E. Black & Lisa M. Lynch, 2004. "What's driving the new economy?: the benefits of workplace innovation," Economic Journal, Royal Economic Society, vol. 114(493), pages 97-116, February.
    2. Hidehiko Ichimura & Christopher R. Taber, 2000. "Direct Estimation of Policy Impacts," NBER Technical Working Papers 0254, National Bureau of Economic Research, Inc.
    3. Baldwin, John R. & Sabourin, David, 2001. "Impact of the Adoption of Advanced Information and Communication Technologies on Firm Performance in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2001174e, Statistics Canada, Analytical Studies Branch.
    4. Baldwin, John R. & Gu, Wulong, 2003. "Participation in Export Markets and Productivity Performance in Canadian Manufacturing," Economic Analysis (EA) Research Paper Series 2003011e, Statistics Canada, Analytical Studies Branch.
    5. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    6. Black, Sandra E & Lynch, Lisa M, 1996. "Human-Capital Investments and Productivity," American Economic Review, American Economic Association, pages 263-267.
    7. Bartel, Ann P & Sicherman, Nachum, 1998. "Technological Change and the Skill Acquisition of Young Workers," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 718-755, October.
    8. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, pages 299-312.
    9. John Van Reenen, 2000. "Who gains when workers train? Training and corporate productivity in a panel of British industries," IFS Working Papers W00/04, Institute for Fiscal Studies.
    10. Baldwin, John R. & Peters, Valerie, 2001. "Training as a Human Resource Strategy: The Response to Staff Shortages and Technological Change," Analytical Studies Branch Research Paper Series 2001154e, Statistics Canada, Analytical Studies Branch.
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    Citations

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    Cited by:

    1. Wei Zhang & Huiying Sun & Simon Woodcock & Aslam H. Anis, 2017. "Valuing productivity loss due to absenteeism: firm-level evidence from a Canadian linked employer-employee survey," Health Economics Review, Springer, vol. 7(1), pages 1-14, December.
    2. Esther Goya & Esther Vayá & Jordi Suriñach, 2016. "Innovation spillovers and firm performance: micro evidence from Spain (2004–2009)," Journal of Productivity Analysis, Springer, pages 1-22.
    3. Esther Goya & Esther Vayá & Jordi Suriñach, 2016. "Innovation spillovers and firm performance: micro evidence from Spain (2004–2009)," Journal of Productivity Analysis, Springer, pages 1-22.
    4. Zhang, Wei & Sun, Huiying & Woodcock, Simon & Anis, Aslam, 2015. "Illness related wage and productivity losses: Valuing ‘presenteeism’," Social Science & Medicine, Elsevier, pages 62-71.
    5. Wen Ci & Jose Galdo & Marcel Voia & Christopher Worswick, 2015. "Wage returns to mid-career investments in job training through employer supported course enrollment: evidence for Canada," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), pages 1-25.
    6. Vincent Vandenberghe, 2017. "The Contribution of Educated Workers to Firms' Efficiency Gains The Key Role of the Proximity to Frontier," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2017012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Someshwar Rao & Andrew Sharpe & Jeremy Smith, 2005. "An Analysis of the Labour Productivity Growth Slowdown in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 3-23, Spring.

    More about this item

    Keywords

    Human Capital; Productivity; Firm-level; Wages; Training; Information and Communication Technology; ICT; Workplace and Employee Survey;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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