Impact of ICT and Human Skills on the European Financial Intermediation Sector

Georg Erber () and Reinhard Madlener

No 5/2008, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: This paper investigates the impact of ICT- and non-ICT capital, and of labour at different skill levels, on productivity and employment in the financial intermediation sector of twelve EU member countries plus the US and Japan. A stochastic possibility frontiers (SPF) approach is applied to assess the relation between the production inputs and to compute both time-varying and average inefficiencies. For the empirical analysis, annual data from 1995 to 2005 are employed that were obtained from recently released data contained in the EU KLEMS database. The results obtained shed some light on the relative impact of ICT- and non-ICT capital and labour inputs, and provide new insights about the structural dynamics between these factor inputs. We find that the financial sectors in the twelve EU member states studied are quite similar in terms of efficiency, and that efficiency and productivity depends much more on human capital than on physical capital. We conclude that learning-by-doing and learning-by-using are more decisive elements in shaping the productivity growth path than ICT investment alone, which can leave managers and employees overwhelmed by the complexity and needs of structural adjustments in the companiesâ organisation.

Keywords: stochastic production possibility frontiers; ICT; structural dynamics (search for similar items in EconPapers)
JEL-codes: C23 C51 D23 E23 O33 O47 O57 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2008-09
New Economics Papers: this item is included in nep-eec, nep-eff, nep-hrm, nep-ict, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2008_005

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