Working Paper: NBER ID: w3582
Authors: Catherine J. Morrison; Ernst R. Berndt
Abstract: In this paper we report results of an empirical assessment of the cost reducing impacts of recent dramatic increases in stocks of "high-tech" office and information technology equipment (0) using annual data from various two digit US manufacturing industries over the 1952-1986 time period. While there are exceptions, on balance we find that in 1986, estimated marginal benefits of investments in this 0 equipment are less than marginal costs, implying over investment in 0 capital in 1986. The sign of the estimated elasticity of demand for labor with respect to changes in the stock of 0 capital is evenly divided in the fourteen industries, but whether positive or negative, in all industries this elasticity increases in absolute magnitude over time, indicating ever greater impacts of 0 capital on the demand for aggregate labor. Finally, our estimates of the elasticity of technical progress with respect to 0-capital are very small in magnitude implying that increases in o capital have only a small impact on technical progress.
Keywords: Information Technology; Productivity; Manufacturing Industries
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Investment in IT equipment (L63) | Productivity (O49) |
| Investment in IT equipment (L63) | Labor demand (J23) |
| Labor demand (J23) | Productivity (O49) |
| Stock of capital (E22) | Labor demand (J23) |
| Capital (E22) | Technical progress (O49) |