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Productivity, Investment in ICT and Market Experimentation: Micro Evidence from Germany and the U.S

Author

Listed:
  • John Haltiwanger
  • Ron Jarmin
  • Thorsten Schank

Abstract

In this paper, we examine the relationship between the use of advanced technologies, such as information and communications technologies (ICT), and related business practices and outcomes such as productivity, employment, the skill mix of the workforce and wages using micro data for the U.S. and Germany. . We find support to the idea that U.S. businesses engage in experimentation in a variety of ways not matched by their German counterparts. In particular, there is greater experimentation amongst young US businesses and there is greater experimentation among those actively changing their technology. This experimentation is evidenced in a greater dispersion in productivity and in related key business choices, like the skill mix and Internet access for workers. We also find that the mean impact of adopting new technology is greater in U.S. than in Germany. Putting the pieces together suggests that U.S. businesses choose a higher mean, higher variance strategy in adopting new technology.

Suggested Citation

  • John Haltiwanger & Ron Jarmin & Thorsten Schank, 2003. "Productivity, Investment in ICT and Market Experimentation: Micro Evidence from Germany and the U.S," Working Papers 03-06, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:03-06
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    References listed on IDEAS

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    1. John M. Abowd & John Haltiwanger & Julia I. Lane & Kristin Sandusky, 2001. "Within and Between Firm Changes in Human Capital, Technology, and Productivity Preliminary and incomplete," Longitudinal Employer-Household Dynamics Technical Papers 2001-03, Center for Economic Studies, U.S. Census Bureau.
    2. Shawn D Klimek & Ron S Jarmin & Mark E Doms, 2002. "IT Investment and Firm Performance in U.S. Retail Trade," Working Papers 02-14, Center for Economic Studies, U.S. Census Bureau.
    3. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2003. "Comparative Analysis of Firm Demographics and Survival: Micro-Level Evidence for the OECD Countries," OECD Economics Department Working Papers 348, OECD Publishing.
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    7. Haltiwanger, John & Jarmin, Ron & Schank, Thorsten, 2003. "Productivity, investment in ICT and market experimentation: micro evidence from Germany und the US," Discussion Papers 19, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    8. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
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    Cited by:

    1. GABLER, Alain & POSCHKE, Markus, 2011. "Growth through Experimentation," Cahiers de recherche 11-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. 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.
    3. Keiko Ito & Sébastien Lechevalier, 2009. "The evolution of the productivity dispersion of firms: a reevaluation of its determinants in the case of Japan," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 405-429, October.
    4. Haltiwanger, John & Jarmin, Ron & Schank, Thorsten, 2003. "Productivity, investment in ICT and market experimentation: micro evidence from Germany und the US," Discussion Papers 19, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    5. Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," Tinbergen Institute Discussion Papers 04-114/3, Tinbergen Institute.
    6. Iacovone,Leonardo & Pereira Lopez,Mariana De La Paz & Schiffbauer,Marc Tobias, 2016. "Competition makes IT better : evidence on when firms use it more effectively," Policy Research Working Paper Series 7638, The World Bank.
    7. 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.
    8. Philippe Aghion & Thibault Fally & Stefano Scarpetta, 2007. "Credit constraints as a barrier to the entry and post-entry growth of firms," Economic Policy, CEPR;CES;MSH, vol. 22, pages 731-779, October.
    9. Maliranta, Mika & Määttänen, Niku, 2013. "Allocation and industry productivity: Accounting for firm turnover," ETLA Working Papers 11, The Research Institute of the Finnish Economy.
    10. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1074-1085, November.
    11. Dirk Pilat, 2005. "Canada's Productivity Performance in International Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 24-44, Spring.
    12. Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: a Happy Marriage or a Dangerous Liaison? A Literature Review," JRC Working Papers JRC76143, Joint Research Centre (Seville site).
    13. Leonardo Iacovone & Mariana Pereira-López & Marc Schiffbauer, 2017. "ICT Use, Competitive Pressures, and Firm Performance in Mexico," World Bank Economic Review, World Bank Group, vol. 30(Supplemen), pages 109-118.
    14. Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: A Literature Review," JRC Working Papers on Digital Economy 2013-07, Joint Research Centre (Seville site).
    15. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.

    More about this item

    Keywords

    CES; economic; research; micro; data; microdata; chief; economist;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • 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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