Twin Transition and Productivity Growth: why intangible capital matters

This paper examines how the twin transition – the simultaneous shift toward greener and more digital production – affects labour productivity growth at the industry level across 16 OECD countries over 2004-2020. We estimate an augmented production function incorporating measures of green task intensity, digital skill intensity, and intangible capital stocks, and test the productivity effect of the twin transition through a composite Twin Transition Index. Our findings suggest that digital skill intensity independently raises productivity growth while green task intensity, considered in isolation, yields no significant effect. The composite index, however, generates positive and significant productivity gains especially when it is complemented by intangible capital and in particular intangible assets not included in national accounts.