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Return of the Solow Paradox? IT, Productivity, and Employment in U.S. Manufacturing

Author

Listed:
  • Acemoglu, Daron

    (MIT)

  • Autor, David

    (MIT)

  • Dorn, David

    (University of Zurich)

  • Hanson, Gordon H.

    (Harvard University)

  • Price, Brendan

    (MIT)

Abstract

An increasingly influential "technological-discontinuity" paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using U.S. manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending on the exact measures, though not since the late 1990s. Most challenging to this paradigm, and our expectations, is that output contracts in IT-intensive industries relative to the rest of manufacturing. Productivity increases, when detectable, result from the even faster declines in employment.

Suggested Citation

  • Acemoglu, Daron & Autor, David & Dorn, David & Hanson, Gordon H. & Price, Brendan, 2014. "Return of the Solow Paradox? IT, Productivity, and Employment in U.S. Manufacturing," IZA Discussion Papers 7906, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7906
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    References listed on IDEAS

    as
    1. Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2016. "Import Competition and the Great US Employment Sag of the 2000s," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 141-198.
    2. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    3. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    4. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
    5. Stephen D. Oliner & Daniel E. Sichel, 2000. "The resurgence of growth in the late 1990s: is information technology the story?," Proceedings, Federal Reserve Bank of San Francisco.
    6. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 367-397.
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    More about this item

    Keywords

    Solow paradox; employment; IT capital; productivity;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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