Information Technology Externalities: Empirical Evidence from 42 U.S. Industries

45 Pages Posted: 11 Oct 2002 Last revised: 3 Feb 2015

See all articles by Sung-Bae Mun

Sung-Bae Mun

Leonard N. Stern School of Business - Department of Economics

M. Ishaq Nadiri

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2002

Abstract

Using interindustry transaction in input-output tables, we examine Information Technology (IT) externalities in U.S. private industries over the period 1984-2000. Our empirical results show that computerization of an industry's customer and supplier industries reduces both labor and material costs of the industry. Moreover, cost savings driven by supplier industries are larger than those driven by customer industries. We also find that industries in the services sector enjoy more benefits from IT spillovers than industries in other sectors because of their high IT capital intensity and composition of interindustry transaction. Decomposition of total factor productivity (TFP) suggests that IT externalities can explain considerable parts of TFP growth, although possible mismeasurement of output in services industries leads to exacerbated technical changes of services industries.

Suggested Citation

Mun, Sung-Bae and Nadiri, M. Ishaq, Information Technology Externalities: Empirical Evidence from 42 U.S. Industries (October 2002). NBER Working Paper No. w9272. Available at SSRN: https://ssrn.com/abstract=338878

Sung-Bae Mun

Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

M. Ishaq Nadiri (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States
212-998-8968 (Phone)
212-995-4013 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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