International Comparisons of Productivity Growth: The Role of Information Technology and Regulatory Practices
49 Pages Posted: 10 Jun 2002
Date Written: May 2002
Abstract
While information technologies (IT) are credited with the recent acceleration in productivity in the United States, many other industrial countries have not experienced a pickup in productivity growth. To explain this productivity divergence, we use panel data from 1992 to 1999 for 13 industrial countries and find that this divergence is driven in part by differences in both the production and adoption of information technologies. Based on this finding, we proceed to investigate what factors might play a role in explaining differences in IT adoption. Our results support the view that burdensome regulatory environments and in particular regulations affecting labor market practices have impeded the adoption of information technologies and slowed productivity growth in a number of industrial countries. We then develop a theoretical model with vintage capital and labor to evaluate the effect of more stringent labor market regulations on a firm's decision to adopt new technologies. We establish conditions under which a tax on firing workers delays the adoption of IT technology. These conditions occur when technological change is skill-biased and a firm must upgrade the quality of its workforce through labor turnover. The resulting delay in adopting IT technology then has negative implications for economy-wide productivity and is largely consistent with our empirical results.
JEL Classification: C12, C33, D24, L50, O47
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
A Comparison of Structural Productivity Levels in the Major Industrialised Countries
By Renaud Bourlès and Gilbert Cette
-
Trends in 'Structural' Productivity Levels in the Major Industrialized Countries
By Renaud Bourlès and Gilbert Cette
-
Education, Market Rigidities and Growth
By Philippe Aghion, Philippe Askenazy, ...
-
Growth and Structural Reforms: A New Assessment
By Thierry Tressel, Martin Schindler, ...
-
Financial Framework for Global Investment and Implications
By Robert Rainish and Pawel Mensz
-
Productivity Growth and Structural Reform in Bulgaria: Restarting the Convergence Engine
By Pritha Mitra and Cyril Pouvelle
-
By Jesús Botero and Diana Gutierrez