Directed technological change,skill complementarities and sectoral productivity growth: evidence from industrialized countries during the new economy

Recent growth accounting exercises attribute strong productivity growth to increased investments in information and communication technologies (ICT) over the last decades, but abstain from potential complementarity effects with other inputs. Based on three different sets of industrialized countries, this study shows that sectoral productivity growth originated from ICT-skill complementarities and skill-biased technological change (SBTC) during the New Economy. In particular, Scandinavian goods-producing sectors and Anglo–Saxon market services reveal strong SBTC effects that originated from ICT-skill complementarities, while such effects were totally missing in Continental market services during the same periods. Further drivers of productivity growth were intermediate and non-ICT capital deepening.