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Computers and Productivity: are Aggregation Effects Important?

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  • Robert H. McGuckin

Abstract

This article examines the empirical implications of aggregation bias when measuring the productive impact of computers. To isolate "aggregation in variables" and "aggregation in relations" problems, we compare production function estimates across specifications, econometric estimators, and data levels. The results show both sources of bias are important, especially when moving from sectors to the economy level, and when the elasticity of all types of noncomputer capital are restricted to be equal. The elasticity of computers is surprisingly stable between industry and sector regressions and does not appear biased by incorporating a restrictive measure of non-computer capital. The data consistently show that computers have a large impact on output. Copyright 2002, Oxford University Press.

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  • Robert H. McGuckin, 2002. "Computers and Productivity: are Aggregation Effects Important?," Economic Inquiry, Western Economic Association International, vol. 40(1), pages 42-59, January.
    • Handle: RePEc:oup:ecinqu:v:40:y:2002:i:1:p:42-59
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    Cited by:

    1. Juan M. Gallego & Luis H. Gutiérrez & Sang H. Lee, 2015. "A firm-level analysis of ICT adoption in an emerging economy: evidence from the Colombian manufacturing industries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(1), pages 191-221.
    2. Desmet, Klaus & Rossi-Hansberg, Esteban, 2009. "Spatial growth and industry age," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2477-2502, November.
    3. Francesco VENTURINI, 2008. "Information Technology, Research & Development, or Both? What Really Drives A Nation's Productivity," Working Papers 321, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Hyunbae Chun, 2007. "The Impact Of Information Technology On Labor Productivity Growth: Evidence From Five OECD Countries, 1970-1990," Korean Economic Review, Korean Economic Association, vol. 23, pages 5-32.
    5. Liao, Hailin & Wang, Bin & Li, Baibing & Weyman-Jones, Tom, 2016. "ICT as a general-purpose technology: The productivity of ICT in the United States revisited," Information Economics and Policy, Elsevier, vol. 36(C), pages 10-25.
    6. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
    7. Stenberg, Peter L., 2014. "The Farm Bill and Rural Economies: Broadband Investment Over the last Decade," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 173277, Agricultural and Applied Economics Association.
    8. Desmet, Klaus & Henderson, J. Vernon, 2015. "The Geography of Development Within Countries," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1457-1517, Elsevier.
    9. Ignacio Hernando & Soledad Núñez, 2004. "The contribution of ICT to economic activity: a growth accounting exercise with Spanish firm-level data," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 315-348, May.

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