Free DP Download 22 February 2022 - Technology and Resilience

Tuesday, February 22, 2022

Xavier Cirera, Diego Comin, Marcio Cruz, Kyungmin Lee, Jesica Torres CEPR Discussion Paper No. 16885 | January 2022

This paper estimates the impact of technology sophistication pre-COVID-19 on the performance of firms during the early stages of the pandemic. We exploit a unique data covering firms from Brazil, Senegal, and Vietnam using a treatment effect mediation framework to decompose the results into a direct and an indirect effect. Increasing pre-pandemic technology sophistication by one standard deviation is associated with 3.8pp higher sales. Both effects are positive, but the direct effect is about 5 times larger than the indirect effect. The total effect on sales is markedly nonlinear with significantly smaller estimates of the reduction in sales for firms with more sophisticated pre-pandemic technology. Our results are robust to different measures of digital responses and matching estimators.

You can now watch a video where Diego Comin tells Tim Phillips about this research.