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IT and Beyond: The Contribution of Heterogenous Capital to Productivity

Daniel Wilson

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper explores the relationship between capital composition and productivity using a unique and remarkably detailed data set on firm-level, asset-specific investment in the U.S. Using cross-sectional and longitudinal regressions, I find that among all types of capital, only computers, communications equipment, software, and office building are associated (positively) with current and subsequent years’ multifactor productivity. The link between offices and productivity, however, is shown to be due to the correlation between the use of offices and organizational capital. In contrast, the link between ICT equipment and productivity is robust to a number of controls and appears to be part causal effect and part reflection of the correlation between ICT and firm fixed (or slow-moving) effects. The implied marginal products by capital type are derived and compared to official data on rental prices; substantial differences exist for a number of key capital types. Lastly, I provide evidence of complementaries and substitutabilities among capital types — a rejection of the common assumption of perfect substitutability — and between particular capital types and labor.

Keywords: Capital Heterogeneity; Productivity; Investment; Production Function Estimation (search for similar items in EconPapers)
JEL-codes: D21 D24 D29 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2004-12
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www2.census.gov/ces/wp/2004/CES-WP-04-20.pdf First version, 2004 (application/pdf)

Related works:
Journal Article: IT and Beyond: The Contribution of Heterogeneous Capital to Productivity (2009) Downloads
Working Paper: IT and beyond: the contribution of heterogeneous capital to productivity (2004) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:04-20

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