Information Technology & Industry ConcentrationIndustry concentration has been rising in the US since 1980. Why? This paper explores the role of proprietary information technology systems (IT), which could increase industry concentration by raising the productivity of top firms relative to others. Using instrumental variable estimates, this paper finds that industry IT system use is strongly associated with the level and growth of industry concentration. The paper also finds that IT system use is associated with greater plant size, greater labor productivity, and greater margins for the top four firms in each industry compared to the rest. Successful IT systems appear to play a major role in the recent increases in industry concentration and in profit margins, moreso than a general decline in competition.
Automation and Jobs: When technology boosts employmentWill industries use new information technologies to eliminate jobs? Sometimes productivity-enhancing technology increases industry employment instead. In manufacturing, jobs grew along with productivity for a century or more; only later did productivity gains bring declining employment. What changed? Markets became saturated. Using two centuries of data, a simple model of demand accurately explains the rise and fall of employment in the US textile, steel, and automotive industries. The model also predicts that computer technology should generate relatively greater job growth in nonmanufacturing industries today. Estimates show computer use is associated with declining employment in manufacturing industries, but not in other sectors.
The Automation ParadoxAt The Atlantic.com: Automation isn’t just for blue-collar workers anymore. Computers are now taking over tasks performed by professional workers, raising fears of massive unemployment...But these fears are misplaced—what’s happening with automation is not so simple or obvious. It turns out that workers will have greater employment opportunities if their occupation undergoes some degree of computer automation. As long as they can learn to use the new tools, automation will be their friend.
The Anti-Innovators:
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James Bessen |
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