Digitization and Labor Market: A Case Study of Middle-Income  Countries

Muhammad Ali  Abrar; Abid   Raza; Azmat hayat

doi:10.32350/jarms.41.04

Muhammad Ali Abrar School of Economics, University of Punjab Lahore, Pakistan
Abid Raza School of Economics, University of Punjab Lahore, Pakistan
Azmat hayat School of Economics, University of Punjab Lahore, Pakistan

DOI: https://doi.org/10.32350/jarms.41.04

Keywords: digitalization, GDP growth, labor force participation, middle-income nations

Abstract

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The current study attempts to find the answers to critical concepts concerning the effect of digitalization on labor market in middle-income nations. It combines internet use and broadband subscriptions as explanatory variables to better understand digitalization. The study included five control variables to eliminate biases caused by the omitted variables. Rate of fertility, urban population proportion, female literateness, public
expenditure as a GDP%, and GDP growth are used as control variables. To estimate the links between labor market and digitalization, the current study used ordinary least square (OLS) regression approach. The use of the internet and broadband subscriptions as indices of digitalization are used in this study. The study chooses 5 groups of economies were selected from the mid-income countries. The dataset is longitudinal, consisting of 89
countries for a 23-year period from 1995-2018. Hausman test is used to determine whether to adopt random effects or fixed effects model. The results showed that for groups 1, 3, 4, and 5, fixed effect proved to be a
better model for both internet usage and broadband. The exception is group 2, where random effect model is a better fit for both the variables. The primary variable of interest, namely the log of internet usage, is found to be significant and positively correlated with the female labor force participation rates for groups 1, 4, and 5. However, it has showed a negative value for groups 2 and 3.One key novel finding of this study is that this
holds for all the group of countries, thereby indicating that broadband provision helps to increase female labor force participation rates irrespective of the structure of society or income levels.

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