Working Paper: CEPR ID: DP16885
Authors: Xavier Cirera; Diego Comin; Marcio Cruz; Kyung Min Lee; Jesica Torres
Abstract: 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.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| prepandemic technology sophistication (O30) | sales performance (L25) |
| prepandemic technology sophistication (O30) | adoption of digital technologies (O14) |
| adoption of digital technologies (O14) | sales performance (L25) |
| prepandemic technology sophistication (O30) | firm resilience (G33) |
| firm resilience (G33) | sales performance (L25) |