The Impact of Computers on Productivity in the Trade Sector: Explorations with Dutch Microdata

Trends in productivity, labor, and investment in the retail and wholesale trade sectors for the Netherlands in the 1988-94 period are examined. The analysis is based on a longitudinally linked panel of firms from the annual survey of Production Statistics collected by Statistics Netherlands (CBS). We find that computer investments have a positive impact on productivity and that the productivity impact of computers is greater in retail than in wholesale trade. There are a number of possible reasons for this finding, including greater penetration of computers in wholesale trade and differences in the way computers are deployed in the two sectors. Contrary to studies in the U.S., however, the impact of computer capital is about the same as other forms of capital. Differences in empirical specifications arising from the absence of data on capital suggest some caution with respect to this conclusion. We also find increased use of "flexible" employment practices, particularly among retail firms, and these appear related to computer use. As expected the measured impacts of computers on productivity are quite sensitive to the particular deflator used for computer equipment.