The Effect of Internet Use on Labor Productivity in Iran

The role of information and communications technology (ICT) in promoting productivity growth has been the focus of much debate in the past few decades. To our knowledge, there is no prior study done on the Iranian economy that particularly has looked at the effect of internet use on labor productivity. In this paper we explore short-run and long-run effects of internet use on labor productivity over the period 1989–2015 in Iran. We use autoregressive distributed lag (ARDL) bounds testing approach (Pesaran et al. 2001) within an augmented Solow (1956) growth model to examine contribution of internet use on labor productivity growth. We find that internet use has a positive long-run impact on labor productivity. Furthermore, the Toda and Yamamoto (1995) non-Granger causality test shows a bi-directional causal relationship between internet use and labor productivity.
JEL Classification: C22, J24, L96.