ABSTRACT

Computers, Obsolescence, and Productivity (Review of Economics and Statistics, August 2002).

What effect have computers had on U.S. productivity growth? This paper shows that increased productivity in the computer-producing sector and the effect of investment in computers on the productivity of those who use them together account for the recent acceleration in U.S. labor productivity. In calculating the computer-usage effect, standard NIPA measures of the computer capital stock are inappropriate because they do not account for technological obsolescence; this occurs when machines that are still productive are retired because they are no longer near the technological frontier. Using a framework that accounts for technological obsolescence, alternative stocks are developed that imply larger computer-usage effects.