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Digitalization, Industry Concentration, and Productivity in Germany

Author

Listed:
  • Ferschli Benjamin

    (University of Oxford, Oxford, UK)

  • Rehm Miriam

    (University of Duisburg-Essen, Duisburg, Germany)

  • Schnetzer Matthias

    (Austrian Federal Chamber of Labour and Vienna University of Economics and Business, Vienna, Austria)

  • Zilian Stella

    (Vienna University of Economics and Business, Vienna, Austria)

Abstract

This paper investigates the links of digitalization and industry concentration with labor productivity at the sectoral level in Germany. Combining data for digitalization and labor productivity from the EU KLEMS database with firm-level data from the CompNet and Orbis Bureau Van Dijk databases to construct industry concentration measures between 2000 and 2015, we show that (1) the German economy appears to have digitized since 2000, and (2) there is no clear-cut relationship between digitalization and market concentration at the industry level. Using a time and sector fixed effects model and controlling for capital intensity, however, we find evidence for (3) a positive effect of both lagged industry concentration and lagged digitalization on productivity at the sectoral level in Germany. This finding is robust to alternative measures of digitalization and industry concentration as well as to their interaction but sensitive to the sector sample and to scale effects from the capital intensity. We, therefore, cautiously conclude that recent technological change appears to have been labor-saving and that productivity-enhancing aspect of a partial “superstar firm” effect may be identified in the German economy, in particular in its manufacturing sector.

Suggested Citation

  • Ferschli Benjamin & Rehm Miriam & Schnetzer Matthias & Zilian Stella, 2021. "Digitalization, Industry Concentration, and Productivity in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(5-6), pages 623-665, November.
    • Handle: RePEc:jns:jbstat:v:241:y:2021:i:5-6:p:623-665:n:8
    DOI: 10.1515/jbnst-2020-0058
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    Citations

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    Cited by:

    1. David Benček & Hannah Rosenbaum & John P. Weche, 2022. "Marktstrukturen und Wettbewerb im Kontext wirtschaftlicher Transformation [Market Structure and Competition During Economic Transformation]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(11), pages 885-890, November.

    More about this item

    Keywords

    digitalization; market concentration; labor-productivity; productivity; paradox; superstar firms;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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