Digitalization and Labour Market Development: An International Pespective

Abstract

This study examines the relationship between digitalization and labour market outcomes across the 27 European Union countries during the period 2018-2024. Using panel data and fixed-effects estimation, the analysis investigates how digital skills, broadband infrastructure, and ICT specialization are associated with employment and income levels. To capture potential structural changes, a post-2021 period indicator and interaction effects between digital skills and the post-2021 period are incorporated into the models. The results indicate that digital skills are positively associated with both employment and income, supporting the view that human capital remains an important determinant of labour market performance in the digital economy. Broadband infrastructure emerges as the most stable predictor, showing a positive and statistically significant relationship with both outcomes across all model specifications. The findings also reveal that the income premium associated with digital skills weakened after 2021, whereas no significant change is observed in the relationship between digital skills and employment. Robustness checks based on lagged specifications and heteroskedasticityconsistent standard errors largely confirm the main results.