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Oxford Economic Papers Advance Access originally published online on August 30, 2005
Oxford Economic Papers 2005 57(4):693-716; doi:10.1093/oep/gpi032
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Right arrow J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
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© Oxford University Press 2005; All rights reserved

Does information and communication technology drive EU-US productivity growth differentials?

Marcel P. Timmer* and Bart van Ark{dagger}

*Groningen Growth and Development Centre, Faculty of Economics, University of Groningen, P.O. Box 800, NL-9700 AV Groningen, The Netherlands e-mail: m.p.timmer{at}rug.nl {dagger} University of Groningen

This paper compares the effects of information and communication technology (ICT) on aggregate labour productivity growth in the European Union and the United States. It focuses on two transmission channels, namely (i) ICT-capital deepening and (ii) total factor productivity (TFP) growth originating from ICT-goods production. We find that together these two effects almost fully explain the US lead in labour productivity growth over the EU during the period 1995–2001. We also argue that, within the EU, non-ICT related sources of growth are the main drivers of productivity differentials between member countries.

Key Words: JEL classification: O11 • O47


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