Information Technology and Returns to Scale

Danial Lashkari, Arthur Bauer and Jocelyn Boussard

American Economic Review, 2024, vol. 114, issue 6, 1769-1815

Abstract: What are the implications of the dramatic fall in IT prices for aggregate technology? When firm-level technologies are continuously differentiable, a factor price shock leads to (i) a substitution between factors and/or (ii) an endogenous response of returns to scale. The second channel is governed by the output elasticity of relative factor demand. Using detailed firm-level data from France, we estimate this elasticity to be positive for IT factor demand. A quantitative exercise accounting for both technological channels shows that falling IT prices can explain much of the changes in concentration and the composition of aggregate labor share in France.

JEL-codes: D22 D24 D33 E25 L63 L86 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Information Technology and Returns to Scale (2020)
Working Paper: Information Technology and Returns to Scale (2019)
Working Paper: Information Technology and Returns to Scale (2019)
Working Paper: Information Technology and Returns to Scale (2019)
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DOI: 10.1257/aer.20220522

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