Labor-saving technological change? : sectoral evidence for Germany

This paper investigates the links between digitalization, market concentration, and labor productivity at the sectoral level in Germany. Combining data for digitalization and labor productivity from the EU KLEMS database with firm-level data from the CompNet and Orbis Bureau Van Dijk databases to construct market concentration measures between 2000 to 2015, we show that (1) the German economy appears to have digitized since 2000, and (2) there is no clear-cut relationship between digitalization and market concentration at the sectoral and descriptive level. Using a time and sector fixed effects model, however, we find evidence for (3) a positive relationship of productivity to both market concentration and digitalization at the sectoral level in Germany. This finding is robust to alternative measures of digitalization and market concentration, but sensitive to the sector sample. We therefore cautiously conclude that recent technological change appears to have been labor-saving, and that productivity-enhancing "superstar firm" effects seem to exist in Germany.