Digitalisation and productivity: In search of the holy grail – Firm-level empirical evidence from EU countries

Abstract

This paper is a contribution to the OECD Going Digital project, which aims to provide policymakers with the tools they need to help their economies and societies prosper in an increasingly digital and data-driven world. For more information, visit www.oecd.org/goingdigital. #GoingDigital All Economics Department Working Papers are available at www.oecd/eco/workingpapers. JT03442722 This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 │ ECO/WKP(2019)2 DIGITALISATION AND PRODUCTIVITY: IN SEARCH OF THE HOLY GRAIL-FIRM-LEVEL EMPIRICAL EVIDENCE FROM EUROPEAN COUNTRIES Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

Bits and bolts

“…The productivity slowdown has accompanied an increasing productivity divergence between highlyproductive "superstar" firms and a mass of laggard firms where productivity growth has been sluggish (Andrews et al, 2016;Berlingieri et al, 2017). At the same time, new digital technologies can yield positive effects on productivity at the firm and industry level (Draca et al, 2009;Syverson, 2011;Gal et al, 2019). Figure 2 shows indeed that the productivity divergence is more pronounced in digital intensive industries.…”

“…Combining cross-country firm-level data on productivity and industry-level data on adoption across 21 EU countries and Turkey and 25 industries over 2009-2015, Gal et al (2019 assess how the adoption of a range of digital technologies affects firm productivity. The digital technologies considered include enablers such as access to high-speed broadband internet, simple and complex cloud computing (i.e.…”

“…The series are normalised to 100 in the starting year (2009=100). Source: Gal et al (2019) following the methodology in Andrews et al (2016[1]). Gal et al (2019) find that overall digital adoption in an industry is associated with productivity growth of firms in those industries.…”

Occupational entry regulations and their effects on productivity in services: Firm-level evidence

“…In keeping with past research (e.g. Arnold et al, 2011;Gal et al, 2019) we augment the model with our OER indicator to test whether occupational entry regulations affect the catch-up process.…”

“…Our fixed effects structure aims at covering 20 As in past studies (e.g. Gal et al, 2019) the frontier is defined as the comparatively more consistent global industry frontier, across all countries contained in the full, cleaned sample of the Orbis database (i.e. 26 OECD and 4 key partner economies) as opposed to the national frontier.…”