ICT and productivity in Europe and the United States

The surge in labour productivity growth in the United States in the late 1990s has prompted much speculation about the capacity of Information and Communication Technologies (ICT) to structurally increase growth. The simultaneous slowdown in productivity growth in the EU suggests the European countries are falling behind. In this paper we will analyse labour productivity growth in 51 industries in Europe and the United States. Using shift-share techniques we identify the industries in which the U.S. has gained a lead and the underlying reasons for this. The results show that the U.S. has grown faster than the EU because of a larger ICT producing sector and faster growth in services industries that make intensive use of ICT. Lagging growth in Europe is concentrated in wholesale and retail trade and the securities industry