Distributional Effects of Fourth Industrial Revolution Technology on Productivity: Evidence from Korean Firm-level Data

We consider the impacts of a new information and communications technology, referred to as the Fourth Industrial Revolution (4IR) technology, on firm productivity by using a Korean dataset. We estimate the total factor productivity (TFP) of each firm using the control function approach for estimating the production functions, and then estimate the impacts of 4IR technology on TFP. We consider quantile regression models to account for the potential heterogeneity in the effects across TFP distribution. Overall, 4IR technology is beneficial to firms with a high level of productivity, suggesting that there is substantial heterogeneity in the effects that cannot be captured by the conditional mean regression. Our results contribute to the literature by investigating the distributional effects (quantile treatment effects) of the use of new technology on productivity, and these findings are expected to have rich implications for policies regarding support on the use of 4IR technology and R&D.