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IT and productivity: A firm level analysis

Emmanuel Dhyne (), Joep Konings (), Joep Konings () and Stijn Vanormelingen ()
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Joep Konings: KU Leuven, VIVES; University of Liverpool Management School and CEPR
Joep Konings: KU Leuven, VIVES

No 346, Working Paper Research from National Bank of Belgium

Abstract: 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: Information technology; total factor productivty (search for similar items in EconPapers)
JEL-codes: D24 L10 O14 O49 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ind and nep-tid
Date: 2018-10
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Handle: RePEc:nbb:reswpp:201810-346