The Link between Technology Use, Human Capital, Productivity and Wages: Firm-level Evidence

• Main Authors: Julie Turcotte, Lori Whewell Rennison
• Format: Article
• Language: English
• Published: Centre for the Study of Living Standards 2004-09-01
• Series: International Productivity Monitor
• Subjects: ict; productivity; human capital; wages
• Online Access: http://www.csls.ca/ipm/9/turcotte_rennison-e.pdf
• ISSN: 1492-9759; 1492-9767

The use of information and communication technologies and investment in education and training are widely believed to play an important role in productivity growth at the aggregate level. However, a lack of micro-level data with information on firms and their workforce has limited the extent to which technology use and human capital could be linked to productivity at the firm level. This paper attempts to fill this research gap, using a new Canadian survey of both establishments and their workers -- the 1999 Workplace and Employer Survey. We examine the relationship between education, training, and technology use and firm productivity and wages, controlling for various firm and worker characteristics (including industry, foreign ownership, trade orientation, employee turnover, experience, occupation, etc.). We find strong evidence that computer use, university education and computer skills development are associated with higher productivity and higher wages. Moreover, the productivity benefit associated with computer use is enhanced when more workers receive computer training, regardless of whether or not they have a university degree.