What Is the Impact of ICT Capital on Firm Productivity? Service Industries Versus Manufacturing

This paper provides a comparative analysis of the impacts of information and communication technology (ICT) on firm labour productivity among firms in Manufacturing and Services, as well as among firms in different service industries. For this purpose I construct the measure of ICT capital using a rich panel data set of Norwegian firms covering the period 2002–2006. The analytical framework is based on the firm–level production function with heterogeneous labour and two types of capital. The results are consistent with ICT having a positive impact on firm labour productivity. Accounting for labour heterogeneity, i.e., for different skills of the workers, provides evidence on complementarities between ICT and the use of high–skilled employees. The results also indicate considerable differences between firms in Manufacturing and Services and between firms in different service industries with respect to productivity effects of ICT, non–ICT and human capital and with respect to the gain of joint use of ICT and high-skilled workers.