Impact of digitalisation on labour productivity in the EU

his study attempts to investigate the impact of digitalisation on labour productivity in a sample of EU countries over the years 20142019. This sample has been fixed as a function of data availability collected by the European Commission through the digital economic and society index (DESI). Panel data analysis reveals a strong impact of digitalisation on labour productivity. Nevertheless, instrumental variable estimates suggest that digitalisation alone cannot significantly increase labour productivity. We find sizable differences across countries, with the Southern and Eastern European countries lagging behind the Central and Northern European countries, probably because of the low public investment in research and development (R&D) and human capital and the smaller size of firms. Findings suggest, in turn, that it would be useful for policymakers to provide enough support to small-sized firms in R&D and human resources management, especially in Southern and Eastern European countries.