Does digital transformation reinforce labor productivity and income in Vietnam? Evidence from quantile on quantile approach

Digital transformation is expected to be an irreversible and intelligent strategy to enhance economic growth in Vietnam in the next decade. However, it has potential drawbacks, such as cybersecurity concerns, technological dependencies, and labor skills and training requirements. Therefore, this study aims to investigate the impact of digital transformation on labor productivity and income per capita in Vietnam from 1990 to 2018. Empirical results from the quantile-on-quantile approach reveal a strong correlation between digital transformation and income per capita and labor productivity at medium-high quantiles and a weak association at low quantiles. More specifically, the study confirms that advancements in digital transformation contribute positively to both income per capita and labor productivity. However, the magnitude and direction of these effects vary across different quantiles, indicating a heterogeneous relationship. These novel findings not only enhance the existing body of literature but also offer practical policy implications for emerging economies, particularly Vietnam, as they navigate the challenges and opportunities of the digital era.