IT as a factor of increasing labor productivity in Germany: case of leading regions

The article examines the role of the IT sector as a factor in increasing labor productivity in the economy of Germany and its leading federal states. The relevance of the study is determined by the expansion of the information technology sector and the growing efficiency of traditional industries through the introduction of digital services, telecommunications infrastructure, and Industry 4.0 solutions. The economic activity “WZ08-J Information and communication” is used as the main measurable indicator, as it reflects the development of information technologies, communication services, and digital activities. The study is based on data for Germany and six federal states with the largest gross regional product: North Rhine-Westphalia, Bavaria, Baden-Württemberg, Lower Saxony, Hesse, and Berlin. The methodology is based on comparing the share of the IT sector in gross value added, the share of employment, and labor productivity calculated according to the author’s approach, taking into account purchasing power parity and total hours worked. It is shown that, with the relatively stable share of the IT sector in the German economy, its labor productivity increased from 34.4 to 78.6 USD/hour in PPP terms. At the level of federal states, the study reveals the heterogeneity of digital development: Berlin leads in the concentration of the IT sector, Bavaria and Baden-Württemberg demonstrate an industrial-digital model, Hesse and North Rhine-Westphalia represent an infrastructure-service model, while Lower Saxony is characterized by a more moderate digital specialization. The scientific novelty of the study lies in the typology of Germany’s leading federal states based on the combination of the structural role of the IT sector, employment, and the productive return of the digital sector.