The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis

Frank R. Lichtenberg

NBER Working Paper No. 4540 (Also Reprint No. r2044)
Issued in November 1993
NBER Program(s):Productivity, Innovation, and Entrepreneurship

This paper examines the output contributions of capital and labor deployed in information systems (IS) at the firm level during the period 1988-91 throughout the business sector, using two different sources of data on these inputs. Our production function estimates suggest that there are substantial excess returns to both IS capital and IS labor, although the size and significance of the excess returns to IS capital is larger. Computer capital and labor jointly contribute, or account for, about 21 percent of output, although only about 10% of both capital and labor income accrue to IS factors. Although IS employees accounted for a very small share of total employment by 1986, IS employment growth is estimated to have made a larger contribution to 1976-86 output growth than non-IS employment, due to the very rapid growth (16% per annum) of IS employment. The estimated marginal rate of substitution (MRS) between IS and non-IS employees, evaluated at the sample mean, is 6: one IS employee can be substituted for six non-IS employees without affecting output.

download in pdf format
   (843 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4540

Published: Economics of Innovation and New Technology, vol. 3, pp. 201-217, 1995

Users who downloaded this paper also downloaded* these:
Morrison and Berndt w3582 Assessing the Productivity of Information Technology Equipment in U.S. Manufacturing Industries
Bresnahan, Brynjolfsson, and Hitt w7136 Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence
Siegel and Griliches w3678 Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing
Krueger w3858 How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989
Mairesse, Greenan, and Topiol-Bensaid w8075 Information Technology and Research and Development Impacts on Productivity and Skills: Looking for Correlations on French Firm Level Data
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us