The Link between Technology Use, Human Capital, Productivity and Wages: Firm-level Evidence

Arguably the most important development in the Canadian workplace in recent years has been the massive introduction of information and communications technologies (ICT). The impact of this development on a range of variables, including productivity and wages, are manifold, but are still poorly understood. Julie Turcotte and Lori Whewell Rennison of Finance Canada examine the effects of education, training and technology use on productivity and wages at the firm level. They make innovative use of Statistics Canada’s Workplace and Employee Survey, which allows the linking of the characteristics of workers in a firm to firm performance measures. They find that productivity is higher: the more intensively technology is used in the firm; the greater the proportion of university educated workers; the greater the participation of workers in formal training programs; the greater the proportion of workers who receive computer training; and the greater the firm’s export orientation. A key finding with important policy implications is that computer skills training can augment the qualifications of lower-skilled workers and consequently boost firm productivity.