IT Shields: Technology Adoption and Economic Resilience during the COVID-19 Pandemic

40 Pages Posted: 2 Nov 2020

See all articles by Nicola Pierri

Nicola Pierri

International Monetary Fund (IMF)

Yannick Timmer

International Monetary Fund (IMF) - Research Department; Board of Governors of the Federal Reserve System

Multiple version iconThere are 3 versions of this paper

Date Written: October 29, 2020

Abstract

We study the economic effects of information technology (IT) adoption during the COVID-19 pandemic. Using data on IT adoption covering almost three million establishments in the US, we find that technology adoption can partly shield the economy from the impact of the pandemic. In areas where firms adopted more IT the unemployment rate rose less in response to social distancing. Our estimates imply that if the pandemic had hit the world 5 years ago, the resulting unemployment rate would have been 2 percentage points higher during April and May 2020 (16% vs. 14%), due to the lower availability of IT. Local IT adoption mitigates the labor market consequences of the pandemic for all individuals, regardless of gender and race, except those with the lowest level of educational attainment.

Keywords: Technology, IT Adoption, Inequality, Skill-Biased Technical Change

JEL Classification: G21, G14

Suggested Citation

Pierri, Nicola and Timmer, Yannick, IT Shields: Technology Adoption and Economic Resilience during the COVID-19 Pandemic (October 29, 2020). Available at SSRN: https://ssrn.com/abstract=3721520 or http://dx.doi.org/10.2139/ssrn.3721520

Nicola Pierri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yannick Timmer (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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