The Return on Information Technology: Who Benefits Most?
Emmanuel Dhyne (),
Jeroen Van den bosch () and
Stijn Vanormelingen ()
No 13246, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Using a novel comprehensive data set of IT investment at the firm level, we find that a firm investing an additional euro in IT increases value added by 1 euro and 38 cents on average. This marginal product of IT investment increases with firm size and varies across sectors. IT explains about 10% of productivity dispersion across firms. While we find substantial returns of IT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in IT (IT capital deepening is low) and misallocation of IT investments.
Keywords: IT; Productivity Growth (search for similar items in EconPapers)
JEL-codes: D24 L10 O14 O49 (search for similar items in EconPapers)
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