George van Leeuwen (CPB, Netherlands), Henry van der Wiel

Disentangling the impact of ICT capital deepening and ICT spillovers on labour productivity growth: Evidence from Dutch firm-level data

This paper presents an empirical analysis of the contribution of ICT to labour productivity growth, using an extensive panel of accounting data for Dutch market services. We estimated enhanced production function models that include ICT spillovers as well as innovation as a component of TFP (growth) with the help of recently developed econometric methods. We compare the results of the production function approach with growth-accounting carried out at the firm level. Doing so, we attempt to reconcile the different pieces of empirical evidence regarding the contribution of ICT to productivity growth.reported in the literature. It is shown that, after accounting for ICT spillovers, the relatively high elasticities of own ICT capital stocks of production function models estimated on firm-level data are consistent with the contribution of ICT capital deepening to labour productivity growth reported in growth-accounting studies. Our results underline that the contribution of ICT spillovers to productivity growth in the years of the ICT boom was more substantial than the contribution of ICT capital deepening as suggested by the standard neo-classical model of firm behaviour.

JEL Codes: C33, D21, D24, L80, O30

Session: 5b   Room 2001   Category: ICT 2

Paper