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Computer Networks and Productivity Revisited: Does Plant Size Matter? Evidence and Implications

September 2010

Written by: Sang V Nguyen, Henry Hyatt

Working Paper Number:

CES-10-25

Abstract

Numerous studies have documented a positive association between information technology (IT) investments and business- and establishment-level productivity, but these studies usually pay sole or disporportionate attention to small- or medium-sized entities. In this paper, we revisit the evidence for manufacturing plants presented in Atrostic and Nguyen (2005) and show that the positive relationship between computer networks and labor productivity is only found among small- and medium-sized plants. Indeed, for larger plants the relationship is negative, and employment-weighted estimates indicate computer networks have a negative relationship with the productivity of employees, on average. These findings indicate that computer network investments may have an ambiguous relationship with aggregate labor productivity growth.

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:
investment, production, productive, estimating, manufacturing, payroll, productivity growth, technology, growth, employee, employed, labor productivity, productivity increases, labor, productivity differences, productivity estimates, expenditure, productivity size, investment productivity, wages productivity, gdp, network

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:
Annual Survey of Manufactures, Ordinary Least Squares, Labor Productivity, North American Industry Classification System, Computer Network Use Supplement

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