ICT and declining labor productivity in OECD

In the era of digital transformation, understanding the factors that drive labor productivity is of paramount importance. Against this backdrop, this study explores the function of Information and Communication Technology (ICT) in labor productivity of OECD countries from 1996 to 2020. Using quantile regression models to capture heterogeneous effects, we find a substantial positive relationship between ICT use and labor productivity. Our empirical analysis reveals that ICT adoption and utilization play a pivotal role in enhancing labor productivity and fostering economic growth. Moreover, the impact of ICT and other factors varies across different quantiles of the labor productivity distribution, highlighting heterogeneous effects. These findings underscore the significance of ICT adoption strategies in enhancing labor productivity and driving economic growth. The study’s implications for industrial policy in OECD countries includes; ICT infrastructure upgrades and investments in digital skills training to counteract the productivity slowdown.