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Computer Networks and U.S. Manufacturing Plant Productivity: New Evidence from the CNUS Data

  • B.K. Atrostic
  • Sang V. Nguyen

How do computers affect productivity? Many recent studies argue that using information technology, particularly computers, is a significant source of U.S. productivity growth. The specific mechanism remains elusive. Detailed data on the use of computers and computer networks have been scarce. Plant-level data on the use of computer networks and electronic business processes in the manufacturing sector of the United States were collected for the first time in 1999. Using these data, we find strong links between labor productivity and the presence of computer networks. We find that average labor productivity is higher in plants with networks. Computer networks have a positive and significant effect on plant labor productivity after controlling for multiple factors of production and plant characteristics. Networks increase estimated labor productivity by roughly 5 percent, depending on model specification. Model specifications that account for endogenous computer networks also show a positive and significant relationship. Our work differs from others in several important aspects. First, ours is the first study that directly links the use of computer networks to labor productivity using plant-level data for the entire U.S. manufacturing sector. Second, we extend the existing model relating computers to productivity by including materials as an explicit factor input. Third, we test for possible endogeneity problems associated with the computer network variable.

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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 02-01.

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Date of creation: Jan 2002
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Handle: RePEc:cen:wpaper:02-01
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  16. Barbara K Atrostic & John Gates & Ron Jarmin, 2000. "Measuring the Electronic Economy: Current Status and Next Steps," Working Papers 00-10, Center for Economic Studies, U.S. Census Bureau.
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  18. Paul Schreyer, 2000. "The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries," OECD Science, Technology and Industry Working Papers 2000/2, OECD Publishing.
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