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The Economic Impact of Capital-Skill Complementarities in German and US Industries Productivity Growth and the New Economy

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  • Thomas Strobel

Abstract

US labor productivity in ICT-skill intensive industries experienced tremendous increases in post–1995 trend growth compared to Germany, while other (non-ICT-skill intensive) industries showed similar growth trends in both countries. Examining the source of industry productivity growth in German ICT-skill intensive sectors, there is no empirical evidence on the influence of ICT-skill complementarities; rather was productivity growth of German Motor Vehicles & Other Transports driven by Non-ICT-skill complementarities. In case of the US two ICT-skill intensive sectors, Office Machinery & Electronic Equipment and Motor Vehicles & Other Transport, were found to have experienced strong productivity growth via ICT-skill complementarities. These findings shed light on varying sectoral complementarities between physical and human capital and show a decisive disparity in the source of German-US productivity differentials in the goods-producing sector during the New Economy. Such differentials originated from a substantial dissimilarity in production processes as well as from higher ICT intensity and skill endowment in the US.

Suggested Citation

  • Thomas Strobel, 2010. "The Economic Impact of Capital-Skill Complementarities in German and US Industries Productivity Growth and the New Economy," ifo Working Paper Series 89, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_89
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    File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-89.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Industry productivity growth; heterogeneous labor; capital-skill complementarity; information and communication technology;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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