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Information Technology Intensity, Diffusion, and Job Creation

Listed author(s):
  • Catherine L. Mann


    (International Business School, Brandeis University)

Using the detailed Statistics of US Business and the Annual Input-Output accounts, this paper addresses the employment dynamics of establishments of different sizes, in different sectors, and of different intensity of use of information technology hardware, software and IT-services over the time period 2001 to 2009. Findings include (1): IT-using sectors that are above-average in IT-intensity started out being three times more IT-intensive and ended up being more than four-times the IT-intensity as the below-average using sectors. Hence, there is widening dispersion in IT-intensity across sectors in the US economy. (2) IT producers are a small part of the economy, only about 3% of employment. However, IT-software and services establishments have tended to add jobs on net, particularly at smaller establishments (size 1-99 employees). This suggests that IT again is the hot-bed of entrepreneurship. (3) Small IT-intensive service establishments account for only about 5% of overall employment. However, net job creation at these small-IT-intensive using establishments accounted for between 13% and 68% of the economy-wide net job change from 2001 to 2009. Entrepreneurship in these IT-using services appears to be promoted by the availability of IT-software and IT-services themselves. (4) Establishments that use IT-intensively both in the manufacturing and services sectors, expand and contract employment over the business cycle relatively more than non-IT-intensive manufacturing and service establishments. This employment management strategy is more dramatic for manufacturing than for services. (5) Three approaches to quantifying the direct and indirect gains to the US economy of lower IT prices and increased IT-intensity add up to between $810 and $935 billion for the five years considered 2002-2007. Including IT-services such as computer design, yields a ball-park round $1 trillion as reasonable figure for the gain to the US economy of broad-based use of information technology hardware, software and IT-services for the mid-decade 2000s five-year time period.

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Paper provided by Brandeis University, Department of Economics and International Businesss School in its series Working Papers with number 46.

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Length: 33 pages
Date of creation: Mar 2012
Handle: RePEc:brd:wpaper:46
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  1. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2012. "Americans Do IT Better: US Multinationals and the Productivity Miracle," American Economic Review, American Economic Association, vol. 102(1), pages 167-201, February.
  2. Bayoumi, Tamim & Haacker, Markus, 2002. "It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries," CEPR Discussion Papers 3555, C.E.P.R. Discussion Papers.
  3. Wilson, Daniel J., 2009. "IT and Beyond: The Contribution of Heterogeneous Capital to Productivity," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 52-70.
  4. Robert C. Feenstra & Benjamin R. Mandel & Marshall B. Reinsdorf & Matthew J. Slaughter, 2013. "Effects of Terms of Trade Gains and Tariff Changes on the Measurement of US Productivity Growth," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 59-93, February.
  5. Sung-Bae Mun & M. Ishaq Nadiri, 2002. "Information Technology Externalities: Empirical Evidence from 42 U.S. Industries," NBER Working Papers 9272, National Bureau of Economic Research, Inc.
  6. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2002. "'Changing Gear' - Productivity, ICT and Services Industries: Europe and the United States," Economics Program Working Papers 02-02, The Conference Board, Economics Program.
  7. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
  8. Mun, S-B. & Nadiri, M.I., 2002. "Information Technology Externalities: Empirical Evidence from 42 U.S. Industries," Working Papers 02-03, C.V. Starr Center for Applied Economics, New York University.
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