Inter-Industry IT Spillovers After the Dot-Com Bust

This paper uses a novel source of fine-grained data on IT labor mobility to test the hypothesis that patterns of productivity growth observed after the dot-com bust can be partially explained by spillovers of e-commerce know-how from IT industries to other industries. The analysis treats the timing and geographic concentration of dot-com layoffs as a source of exogenous variation in the effects of the bust on different IT labor markets. IT-enabled productivity growth from 2001 onwards was faster for IT-using firms that experienced large changes in the skill content of the IT labor pool as a result of the dotcom bust. The evidence suggests that some of the social returns from dot-com IT investments were captured by IT-using industries in the same regions after the bust. Implications for the current wave of investment in data analytics and future productivity growth patterns are discussed.