Firm investments in digital technologies during the Covid-19 pandemic

1:00 to 1:40 p.m.: Creative Disruption – Technology innovation, labour demand and the pandemic (Prof. Harald Dale-Olsen)

We utilize a new survey on Norwegian firms’ digitalization and technology investments, linked to population-wide register data and show that the pandemic massively disrupted the technology investment plans of firms, not only postponing investments, but also introducing new technologies. More productive firms innovated, while less productive firms postponed investments. In the short-term, both firm productivities and worker wages increase on average, but this is driven by wage growth for skilled workers. New technologies are associated with increased long-term expected labour demand for skilled workers, and reduced demand for unskilled workers, particularly for the more productive firms.

(joint work with Erlin Barth and Alex Bryson)

1:40 to 2:20 p.m.: Did Covid-19 Accelerate the Digital Transformation? (Terry Gregory)

Using longitudinal survey data on technology use by German firms, matched with administrative worker–firm registers, we assess whether the Covid-19 pandemic accelerated

the adoption of cutting-edge technologies. Our data break down technologies by their application and level of sophistication, as well as capturing the timing of investments and whether the pandemic prompted these investments. We do not find evidence for an overall acceleration effect: Cutting-edge investments did not spike, and while they were more common among firms with higher remote work potential, such firms invested at a greater rate even before the pandemic, and also had more ambitious investment plans pre-pandemic. However, we do find that technologies facilitating remote work were adopted at a greater rate due to the pandemic, and these technologies appeared to have helped firms mitigate the negative employment effects of the crisis.

(joint work with Melanie Arntz, Michael Böhm, Georg Graetz, Florian Lehmer and Cäcilia Lipowski)

2:20 to 3:00 p.m.: The Pandemic Push: Digital Technologies and Workforce Adjustments (Christian Kagerl)

Using novel survey and administrative employer-employee data, we demonstrate that the COVID-19 pandemic was a push factor for the diffusion of digital technologies in Germany. About two out of three firms invested in digital technologies, particularly in hardware and software to enable decentralized communication, management and coordination. These investments also fostered additional firm-sponsored training, underscoring the complementary relationship between investments in digital technologies and training. We then show that the additional investments helped firms to insure their workers against the economic downturn. Firms that made such additional investments were able to retain more of their employees on regular working hours and relied less on short-time work schemes. Low and medium-skilled workers benefited the most from the insurance effect of digital investments.

(joint work with Christina Gathmann, Laura Pohlan and Duncan Roth)

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