Reassessing the Impact of IT in the Production Function: A Meta-Analysis and Sensitivity Tests

This paper analyzes and extends the growing econometric literature on the economic impact of information technology (IT). I begin with a "meta-analysis" to systematically examine the results of twenty empirical studies and show that much of the observed variation in estimates of the output elasticity of IT is predictable and due to differences in model specification and econometric technique. Using a single dataset for U.S. industries, I then find similar variation across alternative specifications and estimation methods. Most results show a productivity effect from IT-use, but the point estimate of the elasticity is fragile and depends on the details of the estimation.