Research Insights: How Do Firm Digital Adoption Policies Impact Labor Markets and Economic Recovery during the COVID-19 Pandemic?

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Aug 2022
In response to a shock such as the COVID-19 pandemic, a policy that facilitates firm digital adoption can, in the short run, accelerate the recovery of GDP, total employment, and labor income. In the medium run, the policy decreases total employment and the labor force participation rate due to a rise in households opportunity cost of working. However, this comes with higher levels of GDP and labor income, greater average firm productivity, a larger formal employment share, and a marginally lower unemployment rate.