Digitalization During the COVID-19 Crisis: Implications for Productivity and Labor Markets in Advanced Economies

By Florence Jaumotte, Longji Li, Andrea Medici, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Jiaming Soh, Marina Mendes Tavares

March 13, 2023

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Florence Jaumotte, Longji Li, Andrea Medici, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Jiaming Soh, and Marina Mendes Tavares. Digitalization During the COVID-19 Crisis: Implications for Productivity and Labor Markets in Advanced Economies, (USA: International Monetary Fund, 2023) accessed April 21, 2025

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Digitalization induced by the pandemic was seen both as a possible silver-lining from the crisis that could increase longer-term productivity and a risk for further labor market inequality between digital and non-digital workers. The note shows that the pandemic accelerated digitalization and triggered a partial catch-up by less digitalized entities in advanced economies. Higher digitalization levels shielded substantially productivity and hours worked during the crisis. However, the extent to which the pandemic-induced digitalization led to structural change in the economy is less clear. Less digitalized sectors have rebounded more strongly, albeit after stronger declines, and while workers in digital occupations were more shielded from the crisis, there does not appear to be a structural change in the composition of labor demand. Meanwhile, shifts in labor supply are more likely to be permanent, driven by the increase in working from home.

Subject: COVID-19, Digitalization, Economic sectors, Financial crises, Health, Labor, Labor markets, Labor productivity, Production, Technology, Total factor productivity

Keywords: COVID-19, Digitalization, Digitalization level, Europe, Labor market, Labor market tightness, Labor markets, Labor productivity, Longer-term productivity, Pandemic-induced digitalization, Productivity, Productivity regression analysis, Total factor productivity

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2023/003
Stock No:

SDNEA2023003
ISBN:

9798400232596
ISSN:

2617-6750

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