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Human capital is the key to the IT productivity paradox

Author

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  • Gunnarsson, Gudmundur

    () (Mälardalen University, Dept of Business Adminstration and Information Systems)

  • Mellander, Erik

    () (IFAU - Insitute for Labour Market Policy Evaluation)

  • Savvidou, Eleni

    () (Uppsala University, Dept of Economics)

Abstract

Unlike previous analysis, we consider (i) possible externalities in the use of IT and (ii) IT and human capital interactions. Examining, hypothetically, the statistical consequences of erroneously disregarding (i) and (ii) we shed light on the small or negative growth effects found in early studies of the effects of IT on productivity growth, as well as the positive impacts reported more recently. Our empirical analysis uses a 14-industry panel for Swedish manufacturing 1986–95. We find that human capital developments made the average effect of IT essentially zero in 1986 and steadily increasing thereafter, and, also, generated large differences in growth effects across industries.

Suggested Citation

  • Gunnarsson, Gudmundur & Mellander, Erik & Savvidou, Eleni, 2004. "Human capital is the key to the IT productivity paradox," Working Paper Series 2004:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  • Handle: RePEc:hhs:ifauwp:2004_013
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    Cited by:

    1. Gomes, Orlando, 2008. "Too much of a good thing: Endogenous business cycles generated by bounded technological progress," Economic Modelling, Elsevier, vol. 25(5), pages 933-945, September.
    2. Martin Sˆderstrˆm & Roope Uusitalo, 2010. "School Choice and Segregation: Evidence from an Admission Reform," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(1), pages 55-76, March.
    3. Gunnar Eliasson, 2011. "Advanced purchasing, spillovers and innovative discovery," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 121-139, February.

    More about this item

    Keywords

    IT productivity paradox; applied econometrics;

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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