Examining the effects of digital technology expansion on Unemployment: A cross-sectional investigation

Abstract

One of the fast-growing fields of technology expansion is communication technologies. The attention is often focused on the social and cultural effects of these expansions; however, the economic implications of the fast-growing digital technologies can be substantial. This paper is an empirical investigation to find a relationship between digital technology expansion and ICT developments on one major economic issue: unemployment. In this way, three indexes of technology (ICT Development Index, The Digital Index, and Technological Readiness) were chosen according to their focus on digital and ICT indicators, and also their sufficient number of observations to provide a global view. The data consists of 163 countries and is structured in a cross-sectional form including observations of the year 2016. Then, the data were subject to an empirical investigation following OLS and GLS estimation methods, along with stability tests. The results show a significant polynomial degree 2 relationship between unemployment and digital technology indexes. The empirical methodology indicates that the relationship is positive in degree 1 and negative in degree 2 coefficients, so it can be concluded that: as digital technologies are expanding, unemployment grows to a maximum and then begins to decline as technology expansion exceeds a specific value.