Return of the Solow Paradox? It, Productivity, and Employment in U.S. Manufacturing

24 Pages Posted: 25 Jan 2014

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

David H. Autor

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Dorn

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Gordon H. Hanson

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

Brendan M. Price

Board of Governors of the Federal Reserve System

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Abstract

An increasingly influential "technological-discontinuity" paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using U.S. manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending on the exact measures, though not since the late 1990s. Most challenging to this paradigm, and our expectations, is that output contracts in IT-intensive industries relative to the rest of manufacturing. Productivity increases, when detectable, result from the even faster declines in employment.

Keywords: employment, IT capital, productivity, Solow paradox

JEL Classification: O3, J2, L6

Suggested Citation

Acemoglu, Daron and Autor, David H. and Dorn, David and Hanson, Gordon H. and Price, Brendan M., Return of the Solow Paradox? It, Productivity, and Employment in U.S. Manufacturing. IZA Discussion Paper No. 7906, Available at SSRN: https://ssrn.com/abstract=2385183

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David Dorn

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