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The Economic Impact of Capital-Skill Complementarities in German and US Industries Productivity Growth and the New Economy

Thomas Strobel ()

No 89, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: US labor productivity in ICT-skill intensive industries experienced tremendous increases in post–1995 trend growth compared to Germany, while other (non-ICT-skill intensive) industries showed similar growth trends in both countries. Examining the source of industry productivity growth in German ICT-skill intensive sectors, there is no empirical evidence on the influence of ICT-skill complementarities; rather was productivity growth of German Motor Vehicles & Other Transports driven by Non-ICT-skill complementarities. In case of the US two ICT-skill intensive sectors, Office Machinery & Electronic Equipment and Motor Vehicles & Other Transport, were found to have experienced strong productivity growth via ICT-skill complementarities. These findings shed light on varying sectoral complementarities between physical and human capital and show a decisive disparity in the source of German-US productivity differentials in the goods-producing sector during the New Economy. Such differentials originated from a substantial dissimilarity in production processes as well as from higher ICT intensity and skill endowment in the US.

Keywords: Industry productivity growth; heterogeneous labor; capital-skill complementarity; information and communication technology (search for similar items in EconPapers)
JEL-codes: O30 O40 O50 (search for similar items in EconPapers)
Date: 2010
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