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

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  • Nicola Pierri
  • Yannick Timmer

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.

Suggested Citation

  • Nicola Pierri & Yannick Timmer, 2020. "IT Shields: Technology Adoption and Economic Resilience during the Covid-19 Pandemic," CESifo Working Paper Series 8720, CESifo.
  • Handle: RePEc:ces:ceswps:_8720
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    Cited by:

    1. Copestake, Alexander & Estefania-Flores, Julia & Furceri, Davide, 2024. "Digitalization and resilience," Research Policy, Elsevier, vol. 53(3).
    2. Philippe Askenazy & Clément Brébion & Pierre Courtioux & Christine Erhel & Malo Mofakhami, 2023. "HRM Strategies in Response to the First Covid Lockdown: a Typology of French Workplaces," CEPN Working Papers hal-03953817, HAL.
    3. Karen Mossberger & Nicholas F. Martini & Meredith McCullough & Caroline J. Tolbert, 2023. "Digital economic activity and resilience for metros and small businesses during Covid-19," Small Business Economics, Springer, vol. 60(4), pages 1699-1717, April.
    4. Alex Chernoff & Gabriela Galassi, 2023. "Digitalization: Labour Markets," Discussion Papers 2023-16, Bank of Canada.
    5. Pierri, Nicola & Timmer, Yannick, 2022. "The importance of technology in banking during a crisis," Journal of Monetary Economics, Elsevier, vol. 128(C), pages 88-104.
    6. Trunschke, Markus & Peters, Bettina & Czarnitzki, Dirk & Rammer, Christian, 2024. "Pandemic effects: Do innovation activities of firms suffer from Long COVID?," Research Policy, Elsevier, vol. 53(7).
    7. Mathieu P.A. Steijn, 2024. "The persistence and nature of the labor reallocation shock during the COVID-19 crisis," Tinbergen Institute Discussion Papers 24-047/V, Tinbergen Institute.
    8. Dadoukis, Aristeidis & Fiaschetti, Maurizio & Fusi, Giulia, 2021. "IT adoption and bank performance during the Covid-19 pandemic," Economics Letters, Elsevier, vol. 204(C).
    9. Koski, Heli & Fornaro, Paolo, 2024. "Digitalization and Resilience: Data Assets and Firm Productivity Growth During the COVID-19 Pandemic," ETLA Working Papers 113, The Research Institute of the Finnish Economy.
    10. Kuhn, Moritz & Luo, Jinfeng & Manovskii, Iourii & Qiu, Xincheng, 2023. "Coordinated firm-level work processes and macroeconomic resilience," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 107-127.
    11. Ganguli, Ina & Haidar, Jamal Ibrahim & Khwaja, Asim Ijaz & Stemper, Samuel & Zafar, Basit, 2024. "Economic shocks and skill acquisition: Evidence from a national online learning platform at the onset of COVID-19," Labour Economics, Elsevier, vol. 90(C).
    12. Doerr, S. & Erdem, M. & Franco, G. & Gambacorta, L. & Illes, A., 2021. "Technological capacity and firms’ recovery from Covid-19," Economics Letters, Elsevier, vol. 209(C).
    13. Ionel Bostan & Alic Bîrcă, 2024. "Engagement of Moldovan Organizations in Increasing Employment through Flexible Work Arrangements," Central European Business Review, Prague University of Economics and Business, vol. 2024(3), pages 95-122.
    14. Sarra Ben Yahmed & Francesco Berlingieri & Eduard Brüll, 2024. "Local Labour Market Resilience: The Role of Digitalisation and Working from Home," CESifo Working Paper Series 11114, CESifo.
    15. Joël Cariolle & Florian Léon, 2022. "How internet helped firms cope with COVID-19 [Comment internet a aidé les entreprises à faire face à la Covid-19]," Post-Print hal-03606071, HAL.
    16. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan, 2024. "The pandemic push: Digital technologies and workforce adjustments," Labour Economics, Elsevier, vol. 89(C).
    17. Wang, Xueli & Wang, Lei & Zhang, Xuerong & Fan, Fei, 2022. "The spatiotemporal evolution of COVID-19 in China and its impact on urban economic resilience," China Economic Review, Elsevier, vol. 74(C).
    18. Kasra Khademorezaian & Georgia Kosmopoulou & Shane Connelly & Mark Fichtel & Yash Gujar & Heshan Sun, 2023. "Technology use, work adaptation, and economic vulnerability during COVID‐19," Southern Economic Journal, John Wiley & Sons, vol. 90(1), pages 31-43, July.
    19. Juliana Oliveira-Cunha & Capucine Riom & Anna Valero, 2021. "The business response to Covid-19 one year on: findings from the second wave of the CEP-CBI survey on technology adoption," CEP Covid-19 Analyses cepcovid-19-024, Centre for Economic Performance, LSE.
    20. Ben Yahmed, Sarra & Berlingieri, Francesco & Brüll, Eduard, 2022. "Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home," ZEW Discussion Papers 22-031, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    technology IT adoption; inequality; skill-biased technical change;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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