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Do Computers Make Output Harder to Measure?

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Author Info
 McGuckin, Robert H
Stiroh, Kevin J

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Abstract

In recent years, U.S. productivity growth accelerated sharply in manufacturing, but has remained sluggish in the most computer-intensive service industries. This paper explores the possibility that information technology is generating output that is increasingly hard to measure in nonmanufacturing industries, which contributes to the divergence in industry productivity growth rates. Our results suggest that measurement error in 13 computer-intensive, nonmanufacturing industries increased between 0.74 and 1.57 percentage points per year in the 1990s, which understates annual aggregate productivity growth by 0.10 to 0.20 percentage points in the 1990s. This adds to an estimated 0.22 to 0.30 percentage point error from the increasing share of aggregate output in these hard-to-measure industries. Thus, increasing measurement problems may understate aggregate productivity growth by an additional 0.32 to 0.50 percentage points per year in the 1990s and play an important role in understanding recent productivity trends at the industry level. Copyright 2001 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Technology Transfer.

Volume (Year): 26 (2001)
Issue (Month): 4 (October)
Pages: 295-321
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Handle: RePEc:kap:jtecht:v:26:y:2001:i:4:p:295-321

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Charles Steindel, 1992. "Manufacturing productivity and high-tech investment," Quarterly Review, Federal Reserve Bank of New York, issue Sum, pages 39-47.
  2. Allen N. Berger & Loretta J. Mester, 1999. "What explains the dramatic changes in cost and profit performance of the U.S. banking industry?," Finance and Economics Discussion Series 1999-13, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  3. Hill, T P, 1977. "On Goods and Services," Review of Income and Wealth, Blackwell Publishing, vol. 23(4), pages 315-38, December.
  4. Jorgenson, D.W. & Stiroh, K., 1994. "Computers abd Growth," Harvard Institute of Economic Research Working Papers 1707, Harvard - Institute of Economic Research.
  5. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Oxford University Press, vol. 36(2), pages 175-91, April.
  6. Donald Siegel, 1997. "The Impact Of Computers On Manufacturing Productivity Growth: A Multiple-Indicators, Multiple-Causes Approach," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 68-78, February. [Downloadable!] (restricted)
  7. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD, Economics Department. [Downloadable!]
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  8. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March. [Downloadable!] (restricted)
  9. Martin Neil Baily & Robert J. Gordon, 1988. "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-2), pages 347-432. [Downloadable!]
  10. Frank R. Lichtenberg, 1996. "The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis," NBER Working Papers 4540, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. James A. Kahn & Jong-Soo Lim, 1998. "Skilled labor-augmenting technical progress in U.S. manufacturing," Staff Reports 47, Federal Reserve Bank of New York. [Downloadable!]
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  12. Carol Corrado & Lawrence Slifman, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May. [Downloadable!] (restricted)
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  13. Surendra Gera & Wulong Wu & Frank C. Lee, 1999. "Information technology and productivity growth: an empirical analysis for Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 384-407, April. [Downloadable!] (restricted)
  14. Joseph H. Haimowitz, 1998. "Has the surge in computer spending fundamentally changed the economy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 27-42. [Downloadable!]
  15. Diewert, W.E. & Fox, K.J., 1998. "Can Measurement Error Explain the Productivity Paradox?," UBC Departmental Archives 98-04, UBC Department of Economics.
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  16. Erik Brynjolfsson & Lorin Hitt, 1997. "Information Technology as a Factor of Production: The Role of Differences Among Firms," Working Paper Series 201, MIT Center for Coordination Science. [Downloadable!]
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  1. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2003. "ICT and Productivity in Europe and the United States: Where Do the Differences Come From?," Economics Program Working Papers 03-05, The Conference Board, Economics Program. [Downloadable!]
  2. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings 722, Econometric Society. [Downloadable!]
  3. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York. [Downloadable!]
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  4. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "U.S. Economic Growth at the Industry Level," American Economic Review, American Economic Association, vol. 90(2), pages 161-167, May. [Downloadable!] (restricted)
  5. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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