Feb 9, 2012
This paper investigates the impact of ICT- and non-ICT capital, and of labour at different skill levels, on productivity and employment in the financial intermediation sector of twelve EU member countries plus the US and Japan. A stochastic possibility frontiers (SPF) approach is applied to assess the relation between the production inputs and to compute both time-varying and average inefficiencies. For the empirical analysis, annual data from 1995 to 2005 are employed that were obtained from recently released data contained in the EU KLEMS database. The results obtained shed some light on the relative impact of ICT- and non-ICT capital and labour inputs, and provide new insights about the structural dynamics between these factor inputs.