Labor Productivity in the Digital Era: A Spatial-Temporal Analysis

Abstract

This study examined the role of information and communication technologies (ICT) in labor productivity dynamics. The following ICT components were analyzed: the share of organizations using computers and the share of organizations using the internet. The purpose of the study was to analyze labor productivity in the Russian economy in the context of digital transformation, taking into account two dimensions: temporal and spatial. We investigated the impact of organizations’ use of ICT on labor productivity, the relationship between labor productivity and high-tech production, and spatial effects in the dynamics of labor productivity. We used a spatial autoregressive model (SAR) and a panel vector autoregressive model (PVAR) to analyze data for the period 2010–2018. The findings show that digitalization of business processes and an increase in the share of organizations using internet technologies leads to an increase in labor productivity. Certain socioeconomic indicators were also found to be significant, namely, real wages and the percentage of people with higher education in the workforce. Exogenous variables acting as external shocks did not exert significant effects. The results have important implications for managers who develop strategies to increase labor productivity and production efficiency. Such strategies should focus on internetization, business digitalization, and e-commerce.