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Computer Input, Computer Networks, and Productivity

Computer Input, Computer Networks, and Productivity

(p.383) 13 Computer Input, Computer Networks, and Productivity
Hard-to-Measure Goods and Services
B. K. AtrosticSang Nguyen
University of Chicago Press

In a previous study, the authors found a positive and significant relationship between computer networks and labor productivity in U.S. manufacturing, using the first survey data on the presence of computer networks in manufacturing plants, collected in the 1999 Computer Network Use Survey. This chapter extends their previous model to include computer capital as a separate input in the production function. It uses new plant-level data on computer investment from the 2000 Annual Survey of Manufactures to develop a proxy for computer capital input. With available data, a sample of new plants is created with the best proxies possible. Based on this sample, positive and significant relationships were found between labor productivity and both computer networks and computer capital inputs. The findings suggest that understanding the relationship between computers and productivity requires measures of how businesses use computers.

Keywords:   computer networks, labor productivity, manufacturing, computer capital inputs

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