Can Information and Communication Technology Solve Japans Productivity Slowdown Problem?

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Can Information and Communication Technology Solve Japans Productivity Slowdown Problem?

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Author InfoKiyohiko G. Nishimura (Faculty of Economics University of Tokyo 7-3-1, Hongo, Bunkyo-Ku Tokyo 131-0033 Japan) Masato Shirai (Department of Economics University of Tokyo 7-3-1, Hongo, Bunkyo-Ku Tokyo 131-0033 Japan) Abstract This paper has three parts. First, we compile a new industry-by-industry data set of the Japanese economy in which information and communication technology (ICT) stocks are explicitly estimated and labor inputs are disaggregated with respect to age and education. Second, we investigate the effect of ICT on various labor inputs and discern for which labor inputs ICT is able to substitute. Third, we estimate the contribution of capital stocks, including ICT, and various labor inputs to the value-added growth of the Japanese economy in the 1980s and 1990s and explore the factors that determine technological progress.We find ICT capital stocks are an important substitute for young workers with low education levels. These results strongly suggest that ICT inve