Will the pandemic boost productivity in Europe?

The pandemic not only caused an historical recession, it also disrupted consumption habits for consumer, working routine for employees and corporate investment plans. But these disruptions also had a bright side: fostering the digitalization process within the corporate sector. Companies had to implement quickly new tools and invest in new infrastructure to allow their employees to work from home. Consequently, Information and Communication Technology (ICT) investment recorded a rather small decrease during the pandemic. Furthermore, many companies were forced to seek out new digital sales channels as lockdown measures made in-person contact difficult. We assess, in this report, the impact of the “digitalization wave” on firm productivity. We find that the increased adoption rate of some technologies in 2020 led to an increase in productivity at a firm level. While we find evidence that the digitalization push has lifted productivity growth, there is uncertainty to how lasting this effect will be? There are several theoretical considerations that make us believe that the effect will be not just transitory, but that productivity growth will be lifted for a lengthy period.