How do firms respond to cheaper computers? Microeconometric evidence for France based on a production function approach

Les entreprises et la baisse du prix des ordinateurs: une analyse microéconométrique par la fonction de production

Pierre Biscourp, Bruno Crépon, Thomas Heckel and Nicolas Riedinger
Additional contact information
Pierre Biscourp: INSEE - Institut national de la statistique et des études économiques (INSEE)
Bruno Crépon: INSEE - Institut national de la statistique et des études économiques (INSEE)
Thomas Heckel: INSEE - Institut national de la statistique et des études économiques (INSEE)
Nicolas Riedinger: INSEE - Institut national de la statistique et des études économiques (INSEE)

Working Papers from HAL

Abstract: The continuous innovation process experienced by the information technology industries over the last decades has caused the price of computer power to decrease dramatically. This has led many firms to invest massively in increasingly efficient computers. This paper is an attempt to assess the impact of the fall of the cost of this particular input, on the performances of firms in terms of marginal cost, aggregate labor demand and employment by skill. Unlike most studies dealing with the technological bias issue, most of which rely on the estimation of factor demand equations, our evaluation of the complementarities between computers, skilled and unskilled labor rests on the sole estimation of a production function. We define a set of parameters of interest, depending on the observations and on the structural parameters of the production function, enabling us to examine the impact of the computer price decrease on marginal cost, labor demand and the relative demand for skills. Using a panel of more than 5000 continuing French firms followed between 1994 and 1997, we estimate a translog production function and find that the effects of the decrease in the price of computers have been large, both in terms of marginal cost reduction and in terms of skill structure. A 15% fall of the computer price should lead to a decrease of around 0.7% in the marginal cost of production and to a rise of about 3.5% of the skilled to unskilled ratio, other input prices being held fixed.

Keywords: factor demands; technological bias; marginal cost; production function; computers; ordinateurs; fonction de production; coût marginal; demande de facteurs; biais technologique (search for similar items in EconPapers)
Date: 2002-04
Note: View the original document on HAL open archive server: https://insee.hal.science/hal-05714379v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://insee.hal.science/hal-05714379v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05714379

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().