The modern Solow paradox. In search for explanations

Roberta Capello, Camilla Lenzi and Giovanni Perucca

Structural Change and Economic Dynamics, 2022, vol. 63, issue C, 166-180

Abstract: More than 30 years ago, Robert Solow provided the first evidence of the paradoxical low return of technological progress to productivity. Today, in an era of radical technological changes, characterized by disruptive socio-economic transformations in businesses and society, the puzzle is far from being solved. This paper offers additional reflections on this issue. Stemming from the recognition that in European regions a productivity paradox still persists, this study systematically defines and empirically tests some of the sources that could explain the weak association between the adoption of new technologies and the growth of regional labour productivity. Our findings indicate that, in general, new technologies do have a positive impact on the productivity of the sectors of adoption. The propagation of this effect to the whole regional economy, however, is mitigated by sectoral employment reallocation effects towards less productive sectors.

Keywords: Productivity paradox; Regions; Intelligent automation; Advanced digitalisation (search for similar items in EconPapers)
JEL-codes: O33 R11 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:63:y:2022:i:c:p:166-180

DOI: 10.1016/j.strueco.2022.09.013

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