Digitalization During the COVID-19 Crisis: Implications for Productivity and Labor Markets in Advanced Economies (Staff Discussion Notes)

The pandemic accelerated digitalization in advanced economies, with less digitalized entities partially catching up. Higher digitalization levels provided substantial protection for productivity and hours worked during the crisis. However, whether pandemic-induced digitalization created lasting structural economic change remains unclear. Less digitalized sectors experienced stronger declines but subsequently rebounded more strongly. Workers in digital occupations faced less disruption from the crisis, yet labor demand composition does not show evidence of structural shift. In contrast, changes in labor supply appear more likely to be permanent, particularly driven by increased working from home arrangements.