Information and communication technology and labour productivity growth: a production‐frontier approach

Abstract

This work provides evidence of the positive impact of Information and Communication Technology (ICT) on the labour productivity growth of 24 countries, members of the OECD, from 1995 to 2019. Using a non-parametric production‐frontier approach, we decompose labour productivity growth into components attributable to technological change (shifts in the world production frontier), efficiency change (movements toward or away from the frontier), physical (non-ICT) capital change and ICT capital change (movements along the frontier). We find that, on average, the most significant improvement in worldwide labour productivity is attributable to technological change, non-ICT, and ICT capital change over 1995–2019. In addition, we confirm the role of ICT as a general-purpose technology that needs to implement complementary changes in business organisations to exploit its growth opportunities fully. Finally, we conclude that ICT capital contributes to convergence.