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Let's switch to the cloud: Cloud usage and its effect on labor productivity

Tomaso Duso & Alexander Schiersch

Information Economics and Policy2025https://doi.org/10.1016/j.infoecopol.2025.101130article
AJG 2ABDC A
Weight
0.46

Abstract

The advent of cloud computing promises to improve the way firms use IT solutions. Firms are expected to replace large and inflexible fixed-cost investments in IT with more targeted, variable spending on cloud solutions. This is also expected to increase firms' productivity by allowing them to quickly adapt their IT infrastructure to their specific needs. We assess this claim using firm-level data provided by the German statistical offices for the years 2014 and 2016, which allows us to observe who the cloud users are. Our analysis explicitly accounts for self-selection into cloud usage within an endogenous treatment regression framework. Municipal broadband availability is used as a plausible exogenous shifter for cloud usage. We show that cloud usage significantly improves labor productivity for large firms, particularly in manufacturing, but we find no effect for small firms. • Cloud computing enables firms to replace inflexible IT investments with flexible, usage-based spending, potentially boosting productivity. • The study uses data on a representative sample of German firms for 2014 and 2016. • Larger firms, those with IT staff, online sales, or in municipalities with good broadband, are more likely to use cloud solutions. • Results indicate that cloud use increases productivity, but predominantly for large firms, regardless of the sector. • OLS estimations that ignore the endogeneity of cloud usage are biased downward and provide only a lower bound on its potential benefits.

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https://doi.org/https://doi.org/10.1016/j.infoecopol.2025.101130

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@article{tomaso2025,
  title        = {{Let's switch to the cloud: Cloud usage and its effect on labor productivity}},
  author       = {Tomaso Duso & Alexander Schiersch},
  journal      = {Information Economics and Policy},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.infoecopol.2025.101130},
}

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Let's switch to the cloud: Cloud usage and its effect on labor productivity

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Evidence weight

0.46

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.37 × 0.4 = 0.15
M · momentum0.60 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.