The Impact of ICTs and Digitalization on Productivity and Labor Share: Evidence from French firms

29 Pages Posted: 1 Dec 2020

Date Written: November 2020

Abstract

Taking advantage of an original firm-level survey carried out by the Banque de France, we empirically investigate how the employment of ICT specialists (in-house and external) and the use of digital technologies (cloud and big data) have an impact on firm productivity and labor share. Our analysis relies on the survey responses in 2018 of 1,065 French firms belonging to the manufacturing sector and with at least 20 employees. To tackle potential endogeneity issues, we adopt an instrumental variable approach as proposed by Bartik (1991). The results of our cross-section estimations point to a large effect: ceteris paribus, the employment of ICT specialists and the use of digital technologies improve a firm’s labor productivity by about 23% and its total factor productivity by about 17%. Conversely, the employment of in-house ICT specialists and the use of big data both have a detrimental impact on labor share, of about 2.5 percentage points respectively

Keywords: Productivity, ICT, digitalization

JEL Classification: O3, O4, J24, L11

Suggested Citation

Cette, Gilbert and Nevoux, Sandra and Py, Loriane, The Impact of ICTs and Digitalization on Productivity and Labor Share: Evidence from French firms (November 2020). Banque de France Working Paper No. 785, Available at SSRN: https://ssrn.com/abstract=3738213 or http://dx.doi.org/10.2139/ssrn.3738213

Gilbert Cette (Contact Author)

Banque de France ( email )

Paris
France

Sandra Nevoux

CREST-ENSAE ( email )

5 Rue Henry Le Chatelier
PALAISEAU, 91120
France
0033 (0)6 77 25 96 83 (Phone)

HOME PAGE: http://www.sandranevoux.com

Loriane Py

Banque de France ( email )

Paris
France

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