Human Systems Management xx (20xx) x–xx 1

DOI 10.3233/HSM-200904
IOS Press

1 How does the digital economy and society

2 index (DESI) affect labor market indicators
3 in EU countries?

f
roo
4 Oğuz Başola,∗ and Esin Cumhur Yalçin
5
a Department of Labor Economics and Industrial Relations, Kirklareli University, Kayali Kampusu, Turkey
6
b Department of Econometrics, Kirklareli University, Kayali Kampusu, Turkey

rP
tho
7 Abstract.
8 OBJECTIVE: This study aims to determine the effects of the DESI (connectivity, human capital/digital skills, use of internet
9 service by citizens, integration of digital technology and digital public services) on labor market indicators (labor market
10 insecurity, long-term unemployment rate, employment rate, and personal earnings).
11 METHODS: In the study, the 2018 DESI data, the 2018 Better Life Index (job) data and 23 EU countries were analyzed. In
the analysis, the SmartPLS 3.0 program was executed with 23 cases and 5000 bootstraps.
12
Au
13 RESULTS: It was concluded that an increase in the DESI has increased employment rate and personal earnings, which
14 are positive labor market indicators (t: 15,929; 0,849) and has decreased long-term unemployment rate and labor market
15 insecurity, which are negative labor market indicators (t: 3,685; –0,535).
16 CONCLUSIONS: As a result, digitalization in EU countries for the year 2018 has proved that the labor market indicators
17 were improving.
d

18 Keywords: Digital economy, digital society, labor market, SmartPLS, European Union
cte

19 Assoc. Prof. Dr. Oğuz BAŞOL , Dr. Assist. Prof. Dr. Esin Cumhur 35
20 Başol has completed his BA degree YALÇIN , Dr. Yalçin has com- 36
21 in Econometrics Department, Fac- pleted her BA degree in Economet- 37
rre

22 ulty of Economics and Administrative rics Department, Faculty of Eco- 38

23 Sciences, Cukurova University. Dr. nomics and Administrative Sciences, 39
24 Başol has completed his MA and DokuzEylül University. Dr. Yalçin has 40
25 PhD degree in Labor Economics completed her MA and PhD degree 41
26 and Industrial Relations Department, in Econometrics Department, Insti- 42
27 Institute of Social Sciences, Uludağ tute of Social Sciences, DokuzEylül 43
co

28 University. Dr. Başol, who has been University. Dr. Yalçin, who has 44
29 working as Assoc. Prof. Dr. in Labor been working as Assist. Prof. Dr. 45
30 Economics and Industrial Relations in Econometrics Department, Fac- 46
31 Department, Faculty of Economics ulty of Economics and Administrative 47
32 and Administrative Sciences, Kirk- Sciences, Kirklareli University, is 48
Un

33 lareli University, Turkey is interested in sustainable work life, green interested in applied statistics, multivariate statisticsand structural 49
34 jobs and attitudes towards jobs. equation modelling. 50

1. Introduction 51

∗ Corresponding author: Oğuz Başol, Associate Professor,

Department of Labor Economics and Industrial Relations, Kirk- One of the leading concerns in society after the 52

lareli University, Kayali Kampusu, 39000, Turkey. Tel.: +90 552 Industrial Revolution was that use of machines in 53

225 74 85. E-mail: oguzbasol@gmail.com. factories and businesses could lead to the loss of 54

0167-2533/20/$35.00 © 2020 – IOS Press and the authors. All rights reserved
 2 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market

55 jobs for the mass populous. However, this was not one through the increased use of digital technolo- 104

56 the case; while some professions were lost over time, gies; or in other words, the transformation of a 105

57 new occupations replaced them. A similar criticism is traditional lifestyle into a digital lifestyle [2]. The 106

58 also being discussed in literature today. According to increase in the internet usage, the expansion of infor- 107

59 this thought, technological transformation could lead mation technologies, the companies’ increased use 108

60 to the loss of some professions and leave millions of ecommerce, and the digital transformation in pub- 109

61 or even billions of people unemployed. However, it lic services raises the question of how much today’s 110

62 is likely that a transformation similar to what hap- societies will accept and keep up with digitalization. 111

f
63 pened during the Industrial Revolution will occur, To answer this question, the European Union has 112

roo
64 the creation of more jobs will happen after the loss established the DESI. 113

65 of some. The DESI is a composite index of 5 dimensions 114

66 The concept of technological transformation, that summarizes indicators related to the digital per- 115

67 which has perturbed billions of people, has now gone formance of European Union member states and 116

68 beyond the concept of the differentiation of machin- monitors the level of digital competitiveness of coun- 117

rP
69 ery and equipment and has started to be discussed tries [3]. These 5 sub-dimensions are connectivity, 118

70 as the digitization of everything [1, 2]. As a matter human capital, use of internet services, integration of 119

71 of fact, digitalization has now manifested itself in all digital technology and digital public service. 120

72 areas of industries. A very wide range of matters, The first sub-dimension of the DESI is connectiv- 121

tho
73 from the use of social media by individuals to digi- ity. Connectivity itself consists of 5 sub-dimensions. 122

74 tal literacy, from companies carrying all their assets These are fixed broadband, mobile broadband, fast 123

75 and brands to digital media and public services being broadband, ultrafast broadband and broadband price 124

76 transferred into electronic environments, has been index. Connectivity dimension looks at both the 125

77 associated with the concept of information technolo- demand and the supply side of fixed and mobile 126
Au
78 gies or the concept of digital transformation. In other broadband and also the price [3, 4]. Connectivity rep- 127

79 words, transformation is no longer due to technol- resents the assessment of how connected a country is 128

80 ogy or computers, but to a more integral perspective to the internet. While the increase in this index value 129

81 of digitalization itself. Digitalization manifests itself indicates that a larger segment of society is able to 130

82 in all areas of life and continues to expand in all connect to the internet, the decrease in this value indi- 131

areas, from the proliferation of mobile devices to the cates that access to the internet in society remains low
d

83 132

84 delivery of the internet to wider audiences, from e- due to factors such as technical infrastructure or cost. 133
cte

85 commerce applications to e-government services. In The results reveal that the country with the highest 134

86 this context, digitalization is regarded as a dynamic value for 2018 is Finland and the country with the 135

87 that has a significant and widespread effect transform- lowest value is Bulgaria. 136

88 ing the individual, society, state, and economy. The second sub-dimension of the DESI is human 137

89 In this context, the aim of this study was to deter- capital. This dimension consists of 2 sub-indicators; 138
rre

90 mine the effects of the Digital Economy and the internet user skills and advanced skills and devel- 139

91 Society Index (DESI) on labor market indicators for opment. The first indicator, internet user skills, is 140

92 23 EU countries in the year of 2018. In the first part, calculated based on the number and complexity of 141

93 the definition of the Digital Economy and Society activities involving the use of digital devices and the 142
co

94 Index is given; in the second part, the possible effects internet. The second, advanced skills and develop- 143

95 of digital transformation on labor markets are dis- ment, includes indicators related to the employment 144

96 cussed; and then the method and findings of the study of information technology specialists and informa- 145

97 are given. tion technology graduates [4, 5]. An increase in this 146
Un

index value indicates an increase in digital skills in 147

society and the quality of information technology 148

98 2. Digital economy and society index (DESI) experts and the education provided to them, whereas 149

a decrease in this value indicates low digital skills and 150

99 The digital economy, defined as the use of infor- expert employment due to reasons such as a lack of 151

100 mation technologies by the public, business, and need for the internet, a lack of talent and high inter- 152

101 society, is massive, encompassing states, societies, net costs. The results report that the country with the 153

102 businesses, and individuals [1]. A digital society is highest value for 2018 is Finland and the country with 154

103 the transformation of society’s lifestyle into a digital the lowest value is Bulgaria. 155
 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market 3

156 The third sub-dimension of the DESI is the use of health records with other health service providers and 208

157 internet services. This dimension is measured with the prevalence of the e-prescription application [4, 8]. 209

158 3 sub-indicators. The first is internet use. This ratio An increase in this index value indicates that a sig- 210

159 shows what portion of society are internet users. The nificant portion of public services are transferred to 211

160 second is activities online, and this indicator shows digital channels, and a decrease in this value indicates 212

161 the ratio of the society that has used online activities, that the public sector still provides public services 213

162 such as news, social networking and shopping. The through traditional platforms. The results report that 214

163 third indicator is transactions. This ratio shows the the country with the highest value for 2018 is Finland 215

f
164 portion of society engaged in online banking transac- and the country with the lowest value is Bulgaria. 216

roo
165 tions [4, 6]. The increase of this index indicates that The DESI, which includes all indicators, measures 217

166 society’s multi-purpose internet usage practices are a wide range of digital skills, from being connected 218

167 increasing, and the decrease of this value indicates to the internet to digital employment and literacy 219

168 that society’s internet usage practices are not suffi- on the one hand, to the active use of the internet 220

169 ciently developed, perhaps because there is a problem by individuals, companies and the public on the 221

rP
170 with trust in online systems. The results report that the other hand. In this context, the increase of the DESI 222

171 country with the highest value for 2018 is Denmark value indicates a rising digitalization level of a coun- 223

172 and the country with the lowest value is Romania. try both economically and as a society; while the 224

173 The forth sub-dimension of the DESI is integration decrease indicates a decline in the level of digital 225

tho
174 of digital technology. This dimension consists of 2 competence and competition of individuals, compa- 226

175 sub-indicators. The first indicator is the business dig- nies and the public. The results show that Finland 227

176 itization. This ratio shows the ratio of initiatives using has the highest level of digital competitiveness in 228

177 electronic information sharing, social media use, big 2018 and Bulgaria has the lowest level of digital 229

178 data analysis, and cloud solutions. The second indi- competitiveness [6, 7, 8]. 230
Au
179 cator is e-commerce. This ratio shows the proportion
180 of the small and medium-sized businesses which sell
181 online, how much of the small and medium-sized 3. Effect of digitalization on labor market 231

182 businesses sales consist of online sales, and finally

183 how much of the small and medium-sized businesses As can be seen, digitalization has a close impact 232

sales are derived from international online trade [4, 7]. on labor markets. With this ever changing condi-
d

184 233

185 A rise in this index value indicates that businesses are tion, the skills available in the labor markets have 234
cte

186 successful in their digital transformation and that dig- become differentiated. As a natural result of this, 235

187 ital transformation has an economic equivalent, while the competencies of the future have differentiated 236

188 a decrease in this value indicates that businesses are from those of the present, and thus digitization of 237

189 less successful in achieving a digital transformation everything emerges. Accordingly, the concept of the 238

190 and transferring their assets to a digital economy. The new industry has led to the emergence of many new 239
rre

191 results report that the country with the highest value competencies, and almost all of the new competen- 240

192 for 2018 is Ireland and the country with the lowest cies needed are considered in relation to digital skills 241

193 value is Bulgaria. [9–15]. 242

194 The final sub-dimension of the DESI is digi- This change, of course, re-opens the debate on the 243
co

195 tal public services. This dimension consists of 2 impact of a technological transformation on labor 244

196 sub-indicators. The first of these indicators is e- markets, a classical topic that has been discussed 245

197 government. This rate indicates the proportion of the for more than a hundred years. This seemingly new 246

198 documents submitted to the government online, the topic has actually been debated since the 1800s [16]. 247
Un

199 proportion of the forms used in government transac- The first opinion in this sense was put forward by 248

200 tions arriving completed (digitally integrated with the Jean-Baptiste Say. Say stated that some occupations 249

201 information of the individuals), how much of the pub- may be lost with technological change, but in their 250

202 lic services can be carried out online, how much of the place, new occupations will appear, with increasing 251

203 public services are available online for companies and technology, the unit cost of products falls, which is 252

204 the level of digital open data sharing of the public sec- reflected as a decrease in product and service prices, 253

205 tor. The second indicator is e-health. This rate shows and, accordingly, the increase in demand and employ- 254

206 the rate of health services that can be obtained without ment increase as a result for the labor markets [17]. 255

207 going to a doctor or health institution, the sharing of A similar opinion has been put forward by David 256
 4 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market

257 Ricardo. Ricardo stated that in the event that there H2 : The higherthe Digital Economy and Society 309

258 is no sudden drop in product prices, costs can be Index, the lower negative employment indicators will 310

259 reduced through technological progress, which can be. 311

260 in turn increase profits and investments, and as a

261 result employment growth is possible for labor mar-
262 kets [18]. As a matter of fact, Joseph Schumpeter 4. Method 312

263 believed that new jobs will emerge with technological

264 change [19]. But then economists, such as John May- SmartPLS 3.0 structural equation modeling pro- 313

f
265 nard Keynes and Wassily Leontief, have argued that gram was used to analyze the data [41]. This is a 314

roo
266 machines can replace humans in parallel with tech- preferred structural equation modeling analysis pro- 315

267 nological changes, which may create technological gram, where the sample size is limited, the number of 316

268 unemployment [20]. Indeed, a report by Acemoğlu variables (items) constituting the factors is less than 317

269 & Restrepo in 2017 supported a similar finding [21]. 3, and the normal distribution of data is not expected. 318

270 Accordingly, the use of technology can leave peo- In the models predicted by SmartPLS, goodness of 319

rP
271 ple, who do basic jobs, unemployed and lower their fit criteria are not sought for the suitability of the 320

272 income. As can be seen, there are different views on model; instead, item reliability, structure reliability, 321

273 the effects of technology on labor markets. common variance, square root of common variance 322

274 The areas discussed above do not explain digital and “t” values are used [42, 43]. In addition, there 323

tho
275 transformation but shed light on the technological are also studies where the structural equality mod- 324

276 transformation of two centuries ago. The technologi- eling technique, which is thought to beused more in 325

277 cal transformation, which occurred two centuries ago, the analysis of micro-data, is used in the analysis of 326

278 was considered to be innovative in both machinery macro-data [44]. 327

279 and equipment, and today presents itself as digitaliza- The DESI data required to carry out the anal- 328
Au
280 tion. Therefore, today’s technological transformation yses were obtained from the policy unit of the 329

281 refers to digital transformation, and the subject of this European Commission (https://ec.europa.eu/digital- 330

282 study is the reflection of the digitalization of society single-market/en/desi). Labor market indicators were 331

283 on labor markets. taken from the job indicators in the OECD’s Bet- 332

284 When examined in chronological order, van ter Life Index database, both positive and negative 333

Reenen [22], Regev [23], Greenan & Guellec [24], (https://stats.oecd.org/). While the DESI contains
d

285 334

286 Piva & Vivarelli [25], Yang & Lin [26], Coad & Rao data on 28 countries, as the OECD database only 335
cte

287 [27] have revealed that different technological devel- contains data on labor market indicators for 23 EU 336

288 opments for different countries and dates have shown member states, this model is designed for 23 EU 337

289 a positive effect on employment. The effects of digital member states. It is suggested that the suitable sam- 338

290 transformation, which demonstrates today’s techno- ple size for SmartPLS is between 30–100 [45, 46]. 339

291 logical change on labor markets, are similar. For However, in some studies, it is recommended that 340
rre

292 example, estimates by the World Economic Forum between 20–30 sample size is also accepted [47]. The 341

293 [28] suggest that the number of jobs will increase in model in the aforementioned countries is; Austria, 342

294 the future with digital transformation. In fact, stud- Belgium, Czech Republic, Denmark, Estonia, Fin- 343

295 ies in the literature suggest that the digitalization of land, France, Germany, Greece, Hungary, Ireland, 344
co

296 the economy and society will have a positive impact Italy, Latvia, Lithuania, Luxembourg, Netherlands, 345

297 on employment and earnings [29–34]. Therefore, the Poland, Portugal, Slovakia, Slovenia, Spain, Sweden 346

298 following hypothesis has been proposed. and the UK. The variables used in the model can be 347

299 H1 : The higher the Digital Economy and Society examined in Table 1. 348
Un

300 Index, the higher positive employment indicators will Table 1 shows the factors and indicators sub- 349

301 be. ject to analysis. Accordingly, the Digital Economy 350

302 In addition, studies in literature indicate that digi- and Society Index (DESI) was measured with 5 351

303 tal competencies are very important in the future and sub-dimensions. These are; connectivity, digital pub- 352

304 that the employment of individuals providing digital lic services, human capital, integration of digital 353

305 competencies will be easily obtained and the employ- technology skills and use of internet services by cit- 354

306 ment of individuals, who do not provide them, will izens. The definitions for these variables are given 355

307 be difficult [9, 11, 35–40]. The following hypothesis above. The indicators of the labor market are eval- 356

308 has therefore been put forward. uated in two dimensions as negative employment 357
 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market 5

Table 1
Variables Subjected to Analysis

Factors Indicators Code

DESI Connectivity CO
Digital Public Services DPS
Human Capital/Digital skills HC
Integration of Digital Technology by Businesses IDT

f
Use of Internet Services by Citizens UI

roo
Negative Employment Indicators (NEI) Labor Market Insecurity LMI
Long-term Unemployment Rate LTU
Positive Employment Indicators (PEI) Personal Earnings PE
Employment Rate ER

rP
358 indicators and positive employment indicators. The Table 2
359 negative employment indicator factors consist of two Reliability results of the model
360 sub-dimensions. The first factor is the labor mar- Factors Indicators Outer loadings Composite reliability
361 ket insecurity. Labor market insecurity is defined in
DESI CO 0,872 0,928

tho
362 terms of the expected earnings loss associated with
DPS 0,726
363 unemployment and is measured as a percentage. An
HC 0,906
364 increase in labor market insecurity shows that the
IDT 0,765
365 confidence in labor markets is low. According to
UI 0,957
366 the results, Luxembourg has the lowest score with
NEI LMI 0,984 0,985
Au
367 1.7 and Greece has the highest score with 29.8. The
LTU 0,985
368 second factor is long-term unemployment. This indi-
PEI ER 0,758 0,745
369 cator refers to the number of persons who have been
PE 0,782
370 unemployed for one year or more as a percentage of
371 the labor force and is measured as a percentage. An
increase in this rate shows that the rate of long-term
d

372

373 unemployment in the country has increased. Accord-

lars. The second sub-dimension is the employment 396
cte

374 ing to the results, the lowest long-term unemployment

rate. This indicator is the ratio of employed persons 397
375 rate is in the Czech Republic with 1.04%, while the
aged 15 to 64 over the population of the same age and 398
376 highest long-term unemployment rate is in Greece
this indicator is measured as a percentage. According 399
377 with 15.65%. This factor is designed to measure neg-
to the results, Sweden has the highest rate with 77% 400
378 ative indicators in labor markets, and an increase in
and Greece has the lowest rate score with 53%. This
rre

401
379 this value indicates that the confidence of citizens
factor is designed to measure positively-rated indica- 402
380 in labor markets in the country has decreased and
tors in labor markets, and the increase in value here is 403
381 long-term unemployment has increased. The final
indicative of increased employment and job-related 404
382 factor is positive employment indicators and this fac-
earnings. 405
co

383 tor consists of 2 sub-dimensions. The first of these

384 sub-dimensions is personal earnings. This indica-
385 tor refers to the average annual wages per full-time
386 equivalent dependent employee, which are obtained 5. Findings 406
Un

387 by dividing the national-accounts-based total wage

388 bill by the average number of employees in the total For SmartPLS 3.0, items in a model need to have 407

389 economy, which is then multiplied by the ratio of an outer load of more than 0.70 in order to be reli- 408

390 average usual weekly hours per full-time employee able [48]. In order for the factors in the model to 409

391 to average usually weekly hours for all employees. be reliable, composite reliability values and internal 410

392 This rate is measured in US Dollars. According to consistency values should be higher than 0.70 [49]. 411

393 the results, Luxembourg has the highest work-related The variables, items, item reliability, composite relia- 412

394 earnings average of 63,062 dollars while Hungary bility and internal consistency values in the predicted 413

395 has the lowest work-related average of 22,576 dol- model can be examined in Table 2. 414
 6 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market

Table 3 tion factor (VIF) was lower than 10. As a result, the 442

Validity Results of the Model issue of multicollinearity is not present among the 443

Variables AVE 1 2 3 variables. 444

After the model was found to be reliable and valid 445

1. DESI 0,722 0,850∗ –0,535 0,849
in SmartPLS, it was evaluated by considering the “t” 446
2. NEI 0,970 –0,535 0,985∗ –0,712
values to determine whether the paths in the model 447
3. PEI 0,793 0,849 –0,712 0,890∗
were significant or not. If the value of “t” was greater 448
∗ Square root of AVE value. than 1.96, the path in the model is significant; if 449

f
the value of “t” was less than 1.96, the path in the 450

roo
415 Table 2 shows, factors, indicators, outer loadings model is interpreted as insignificant. The values of 451

416 and composite reliability of the model. According the paths and “t” values in the estimated model can 452

417 to the results of the analysis, the outer loads of the be examined in Fig. 1. 453

418 items in the model were higher than 0.70 and the com- Figure 1 shows the “t” values for the predicted 454

posite reliability values of the variables were higher model. According to this; all paths in the predicted 455

rP
419

420 than 0.70. Accordingly, the items and variables in said model are significant (t > 1,96). According to this; 456

421 model are reliable. the DESI has a statistically significant effect on posi- 457

422 In order for the predicted model to be valid in tive employment indicators and negative employment 458

423 SmartPLS, the average variance extracted (AVE) indicators. 459

tho
424 value should be higher than 0.50 [49] and the square Figure 2 shows the coefficient values for the pre- 460

425 root of the average variance extracted should be dicted model. Accordingly, in SmartPLS, the path 461

426 higher than the correlation values in the correspond- coefficients in the model vary between –1 and +1. 462

427 ing column [50]. The validity values in the predicted When the path coefficient approaches 1, the effect 463

428 model can be examined in Table 3. level increases; when it approaches 0, the effect level 464
Au
429 Table 3 shows the validity values in the predicted decreases. It is concluded that when the path coef- 465

430 model. Accordingly, it was determined that the aver- ficient values are negative (–), they have a negative 466

431 age variance extracted (AVE) was greater than 0.50 effect on the variable; when the path coefficient val- 467

432 and that the average variance extracted was higher ues are positive (+), they have a positive effect on 468

433 than the correlation values in the corresponding col- the variable. The coefficient values for the predicted 469

model can be examined in Fig. 2.

d

470
434 umn. Therefore, the said model is a valid model.
435 A reliable and valid model in SmartPLS should Figure 2 shows the coefficient values for the 471
cte

436 also be checked for multicollinearity. Hence, the cor- predicted model. Accordingly, the DESI positively 472

437 relations between the independent variables should affects positive employment indicators (0,849) and 473

438 be below 0.70 and variance inflation factor (VIF) negatively affects negative employment indicators 474

439 values should be below 10 [51]. Accordingly, it was (–0.535) for 23 European Union member countries 475

determined that the correlations between independent in 2018. Furthermore, 72.1% of the change in posi- 476
rre

440

441 variables were below 0.70 and the variance infla- tive employment indicators and 28.7% of the change 477
co
Un

Fig. 1. t values for the predicted model.

 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market 7

f
roo
rP
Fig. 2. Coefficient values for the predicted model.

Table 4 earnings; and reduces long-term unemployment and 499

Multicollinearity results insecurity towards labor markets. 500

This result is consistent with the findings of the

tho
501
Correlations
Indicators VIF CO DPS HC IDT studies in literature, and the literature gives four 502

important conclusions about the results of the cur- 503

CO 2,793 –
rent study. The first is the increase in employment 504
DPS 1.898 0.04 –
and earnings in societies that successfully man- 505
HC 5.270 0.28 0.13 –
Au
age digital transformation. For example, research 506
IDT 2.081 –0.47∗ –0.19 –0.26 –
by Balsmeier & Woerter [34] covering the years 507
UI 8.143 –0.54∗∗ 0.34 –0.26 0.08
2014-2015 for Switzerland concluded that digital- 508
∗ p < 0.05; ∗∗ p < 0.01.
ization investments increased the employment of 509

highly skilled workers. Research carried out by Titan 510

in negative employment indicators are explained by et al. [29] concluded that the increase in the dig-
d

478 511

479 the DESI. ital economy in Romania between 2006 and 2011 512

increased information technology employment. The

cte

513

study conducted by Lee & Clark [32] that covered 514

480 6. Results and discussion 2009–2015 in the UK and the result has shown 515

that the development of advanced technology has 516

481 The current study was conducted to determine increased the employment rate and wages of middle- 517
rre

482 the effects of the DESI on negative employment skilled workers while lowering the average salary 518

483 indicators and positive employment indicators for of low-skilled workers. A study by Bauer [31] con- 519

484 23 EU member countries with 2018 data. Accord- cluded that digitalization is effective in the emergence 520

485 ing to the predictions made with the SmartPLS 3.0 of new industries, employment opportunities, and 521

occupations with high-income potential. Simic [33]

co

486 program, it has been determined that the DESI posi- 522

487 tively affects positive employment indicators (0,849; demonstrated that in Serbia, digital competences 523

488 t: 15,929) and negatively affects negative employ- support employment and digital inadequacies cre- 524

489 ment indicators (–0,535; t: 3,685). The result is that ate unemployment. The report by Piva & Vivarelli 525
Un

490 the digital transformation of the economy and soci- [30] demonstrated a similar situation. Accordingly, 526

491 ety increases the employment rate and job-related technology-based R & D expenditures realized for 527

492 earnings, which are positive indicators of the labor 11 EU countries between 1998 and 2011 increased 528

493 markets, and reduces long-term unemployment and employment in the medium and high technology sec- 529

494 insecurity in the labor markets. In other words, the tors and did not affect the low-tech sectors. 530

495 widespread use of the internet, the increase in infor- Other findings in the literature include the evalu- 531

496 mation technology-based employment, the active use ation and reflection of digitalization in terms of new 532

497 of the internet by individuals, companies and the gov- century competencies. Research carried out by van 533

498 ernment, increases employment rates and job-related Laar et al. [9, 11] focuses on 21st-century skills and 534
 8 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market

535 states that in the future digital skills may have an say that the widespread use of the internet is a factor 587

536 important place in labor markets and facilitate the in reducing job insecurity. 588

537 employment of individuals. Indeed, a similar conclu- When all the results are evaluated, it is possible to 589

538 sion was reached in a study carried out by Misra & say that the digitalization of the economy and society 590

539 Khurana [38] and Fleaca & Stanciu [39]. Research by has a corrective effect on the dynamics of labor mar- 591

540 Campos et al. [35] covering the years 2007–2011 in kets. However, it is not true to consider digitalization 592

541 Spain reached the conclusion that internet users had a magic wand. Digitalization can only yield accurate 593

542 a higher advantage in finding work. Also, research results if equal opportunities are created. Therefore, 594

f
543 by Frey & Osborne [52] has shown that with tech- it is important that the economic and social digital 595

roo
544 nological progress, low-skilled workers will turn to transformation created is inclusive, achievable and 596

545 tasks that are not computerized, i.e. tasks that require widespread. 597

546 creative and social intelligence. Another study by Regarding the limitations of the study, current 598

547 Nemeskéri et al. [37] focuses on Hungarian labor research has reached this conclusion (the effects of 599

548 markets and highlights that a lack of digital skills the DESI on negative employment indicators and 600

rP
549 creates problems with entering labor markets. From positive employment indicators) based on data from 601

550 here, it is possible to say that digitalization will be an 23 EU member states for 2018. It should be noted 602

551 important skill in the future and that it will be eas- that results for different years and different countries 603

552 ier for societies that enable digital transformation to may vary. This study has used the structural equa- 604

tho
553 enter labor markets. tion modeling technique with macro data. It should 605

554 Some of the research in literature have focused also be taken into consideration that the results may 606

555 on the reflections of digital transformation on per- be different in studies where different techniques are 607

556 formance, efficiency, and competition. For example, used. 608

557 Martin-Pena et al. [53] examined the relationship Determination of the effect of digitalization on 609
Au
558 between digitalization and business performance in labor markets, which is the subject of this study, is one 610

559 Spain between 2014–2017 and showed a positive of the important pursuits in current human history. 611

560 relationship between digitalization and business per- Concerning the further research, it can be suggested 612

561 formance. Research carried out by Jalava & Pohjola that the researchers interested in the matter, may aim 613

562 [54] also determined that information and commu- to answer the question “Does the impact of digitaliza- 614

nication technology increased production and labor tion on the labor market differ according to welfare
d

563 615

564 productivity in Finland in 1995–2005. Saculescu [55] regimes?”. In addition, a similar analysis for the pre- 616
cte

565 examined the impact of development in the infor- and post-crisis periods may be important in terms 617

566 mation and communication technology sector on of revealing “the role of the crisis in the impact of 618

567 competitiveness in European Union member states digitalization on labor markets”. 619

568 and concluded that the increase in the share of infor-

569 mation technology in the economy in almost every
rre

570 country increased the competitiveness of the coun-

571 try. Research conducted by Dobrolyubova et al. [56] References 620
572 focused on digital transformation in Russia, and the
573 results show that economic and social digital trans- [1] Moroz M. The level of development of the digital economy 621
in Poland and selected European countries: A comparative
co

622
574 formation made the country’s economy and labor
analysis. Foundations of Management. 2017;9(1):175-90. 623
575 market more competitive. From this point, it would
[2] Dufva T, Dufva M. Grasping the future of the digital society. 624
576 be appropriate to infer that the societies that suc- Futures. 2019;107:17-28. 625
577 cessfully carry out the digital transformation have [3] European Commission. Connectivity: Broadband market
Un

626
578 improved performance and productivity and that developments in the EU. European Commission Report; 627

579 the labor markets of these countries may also be 2019a. 628

580 competitive [57, 58]. [4] Kotarba M. Measuring digitalization – key metrics. Foun- 629
dation of Management.2017;9(1):123-38. 630
581 Finally, digitalization increases the self-confidence
[5] European Commission. Human capital: Digital inclusion 631
582 of individuals from a professional standpoint. For and skills. European Commission Report. 2019b. 632
583 example, research by Lissitsa & Chachashvili- [6] European Commission. Use of internet service. European 633
584 Bolotin [36] and Nam [40] showed that internet use Commission Report. 2019c. 634
585 increases the self-confidence of the individual from [7] European Commission. Integration of digital technology. 635
586 a professional standpoint. From here, it is possible to European Commission Report. 2019d. 636
 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market 9

637 [8] European Commission. Digital public services. European [29] Titan E, Burciu A, Manea D, Ardelean A. From traditional 697
638 Commission Report. 2019e. to digital: The labour market demands and education expec- 698

639 [9] Van Laar E, Van Deursen AJAM, Van Dijk JAGM, De Haan tations in an EU context. Procedia Economics and Finance. 699

640 J. The relation between 21st-century skills and digital skills: 2014;10:269-74. 700

641 A systematic literature review. Computers in Human Behav- [30] Piva M, Vivarelli M. Technological change and employ- 701
642 ior. 2017;72:577-88. ment: Were Ricardo and Marx right? IZA Institute of Labor 702

643 [10] Messaadia M, Ouchani S, Louis A. A recursive k-means Economics, Discussion Paper. 2017;10471:1-27. 703

644 towards trade-off between PLM competences, positions, [31] Bauer JM. The Internet and income inequality: Socio- 704
645 and offers. Procedia Computer Science. 2018;134:297-302. economic challenges in a hyperconnected society. Telecom- 705

f
646 [11] Van Laar E, Van Deursen AJAM, Van Dijk JAGM, De Haan munications Policy. 2018;42(4):333-43. 706

roo
647 J. 21st-century digital skills instrument aimed at working [32] Lee N, Clarke S. Do low-skilled workers gain from 707
648 professionals: Conceptual development and empirical vali- high-tech employment growth? Hightechnology multipli- 708
649 dation. Telematics and Informatics. 2018;35(8):2184-200. ers, employment and wages in Britain. Research Policy. 709

650 [12] Moldovan L. State-of-the-art analysis on the knowledge and 2019;48(9):1-11. 103803 710

651 skills gaps on the topic of Industry 4.0 and the require- [33] Simić I. Digital competences in the function of reducing 711
652 ments for work-based learning. Procedia Manufacturing. unemployment. Tourism in Function of Development of The 712

rP
653 2019;32:264-301. Republic of Serbia, Tourism as a Generator of Employment 713

654 [13] Ancarani A, Di Mauro C, Mascali F. Backshoring strategy Thematic proceedings I. 2019;4(1):288-306. 714

655 and the adoption of Industry 4.0: Evidence from Europe. [34] Balsmeier B, Woerter M. Is this time different? How digi- 715
656 Journal of World Business. 2019;54(4):360-71. talization influences job creation and destruction. Research 716

657 [14] Van Laar E, Van Deursen AJAM, Van Dijk JAGM, De Haan Policy. 2019;48(8):1-10. 103765 717

tho
658 J. Determinants of 21st-century digital skills: A large-scale [35] Campos R, Arrazola M, Hevia J. Online job search in 718
659 survey among working professionals. Computers in Human the Spanish labor market. Telecommunications Policy. 719
660 Behavior. 2019;100:93-104. 2014;38(11):1095-116. 720

661 [15] Colombo E, Mercorio F, Mezzanzanica M. AI meets labor [36] Lissitsa S, Chachashvili-Bolotin S. The less you know, 721
662 market: Exploring the link between automation and skills. the better you’ll sleep – Perceived job insecurity in the 722
663 Information Economics and Policy. 2019;47(47):27–37. Internet age. Computers in Human Behavior. 2016;62: 723
Au 754-61. 724
664 [16] Feldmann H. Technological unemployment in indus-
665 trial countries. Journal of Evolutionary Economics. [37] Nemeskéri Z, Szellő J, Zádori I, Barakonyi E. Digital 725

666 2013;23(5):1099-126. competencies and career orientation in the 21st century: 726

667 [17] Say JB. A treatise on political economy or the production, Hungarian labor market approach. Revista Română de 727

668 distribution and consumption of wealth. 4th ed. Ontario, Statistică. 2016;12:117-31. 728

669 Canada: Batoche Books. 2001. [38] Misra RK, Khurana K. Employability skills among informa- 729
d

670 [18] Ricardo D. On the principles of political economy and tax- tion technology professionals: A literature review. Procedia 730

671 ation. 3th ed. Ontario, Canada: Batoche Books. 2001. Computer Science. 2017;122:63-70. 731

[39] Fleaca E, Stanciu RD. Digital-age learning and business

cte

732
672 [19] Schumpeter JA. Business Cycles. New York: McGraw-Hill.
673 1939. engineering education – a pilot study on students’ e-skills. 733
Procedia Manufacturing. 2019;32:1051-7. 734
674 [20] Works R. The impact of technology on labor markets.
675 Monthly Labor Review. 2017. [40] Nam T. Technology usage, expected job sustainability, and 735
perceived job insecurity. Technological Forecasting and 736
676 [21] Acemoğlu D, Restrepo P. Robots and jobs: Evidence from
Social Change. 2018;138(C):155-65. 737
labor markets. NBER Working Papers. 2017.
rre

677
[41] Ringle CM, Wende S, Will A. SmartPLS 2.0.M3. Hamburg: 738
678 [22] Van Reenen J. Employment and technological innovation:
SmartPLS 2005. Available from: http://www.smartpls.de. 739
679 Evidence from U.K. manufacturing firms. Journal of Labor
680 Economics. 1997;15(2):255-84. [42] Kwong K, Wong K. Partial least squares structural equation 740
modelling (pls-sem) techniques using Smartpls. Marketing 741
681 [23] Regev H. Innovation, skilled labour, technology and perfor-
Bulletin. 2013;24(Technical Note 1):1-32. 742
co

682 mance in Israeli industrial firms. Economics of Innovation

683 and New Technology. 1998;5(2):301-23. [43] Dülgeroğlu İ, Başol O. İş stresi ve çalişma yaşami 743
kalitesi algisinin yansimalari: Satiş temsilcileri üzerine 744
684 [24] Greenan N, Guellec D. Technological innovation and
bir araştirma. Business and Economics Research Journal. 745
685 employment reallocation. Labour. 2000;14(4):547-90.
2017;8(2):293-304. 746
[25] Piva M, Vivarelli M. Innovation and employment: Evi-
Un

686
[44] Başol O. OECD ülkelerinde yaşam tatmini üzerine bir 747
687 dence from Italian microdata. Journal of Econonimcs.
değerlendirme. İş-Güç Endüstri İlişkileri ve İnsan Kay- 748
688 2005;86(1):65-83.
naklari Dergisi. 2018;20(3):67-86. 749
689 [26] Yang CH, Lin CHA. Developing employment effects
[45] Chin WW, Newsted PR. Structural equation modeling anal- 750
690 of innovations: microeconometric evidence from Taiwan.
ysis with small samples using partial least squares. In: Hoyle 751
691 Development Econonomics. 2008;46(2):109-34.
R, editors. Dtatistical strategies for small sample research. 752
692 [27] Coad A, Rao R. The firm-level employment effects of inno- Thousand Oaks: Sage Publications. 1999;307-41. 753
693 vations in high-tech US manufacturing industries. Journal
[46] Tüter Şahinoğlu K, Giray Yakut S. An evulation on effect of 754
694 of Evolution Economics. 2011;21(2):255-83.
freedoms on economic performance with structural equation 755
695 [28] World Economic Forum. Understanding the Impact of Digi- modeling. EKOIST Journal of Econometrics and Statistics. 756
696 talization on Society. World Economic Forum Report. 2019. 2019;30:1-20. 757
 10 O. Başol and E.C. Yalçin / How does the digital economy and society index (DESI) affect labor market

758 [47] Ahmadi A, Abzari M, Isfahani AN, Safari A. Minimum ence on firm performance. Journal of Business & Industrial 777
759 sample size estimation in PLSSEM: The inverse square Marketing. Available from: https://doi.org/10.1108/jbim- 778
760 root and gammaexponential methods. Information Systems 12-2018-0400. 779
761 Journal. 2018;28:227-61. [54] Jalava J, Pohjola M. ICT as a source of output and pro- 780
762 [48] Hulland J. Use of partial least squares (PLS) in strate- ductivity growth in Finland. Telecommunications Policy. 781
763 gic management research: A review of four recent studies. 2007;31(8-9):463-72. 782
764 Strategic Management Journal. 1999;20(2):195-204. [55] Savulescu C. Dynamics of ICT Development in the EU. 783
765 [49] Bagozzi RP, Yi Y. On the evaluation of structural equa- Procedia Economics and Finance. 2015;23:513-20. 784
766 tion models. Journal of the Academy of Marketing Science. [56] Dobrolyubova E, Alexandrov O, Yefremov A. Is Rus- 785

f
767 1988;16(1):74-94. sia ready for digital transformation? In: Alexandrov D, 786

roo
768 [50] Fornell C, Larcker DF. Evaluating structural equation mod- Boukhanovsky A, Chugunov A, Kabanov Y, Koltsova O, 787
769 els with unobservable variables and measurement error. editors. Digital Transformation and Global Society. Com- 788
770 Journal of Marketing Research. 1981;18(1):39-50. munications in Computer and Information Science, vol 745. 789

771 [51] Hair C, Jr, Black WC, Babin BJ, Andersen RE. Multivariate Cham: Springer. 2017;431-44. 790

772 data analysis. 7th ed. Edinburgh, Scotland: Pearson. 2014. [57] Ahmadi A, Abzari M, Isfahani AN, Safari A. High- 791

773 [52] Frey CB, Osborne MA. The future of employment: How performance, knowledge sharing and ICT skills. Human 792

rP
774 susceptible are jobs to computerisation? Technological System Management. 2018;37:271-80. 793

775 Forecasting and Social Change. 2017;114:254-80. [58] Khan NU, Shuangjie L, Khan SZ, Anwar M. Entrepreneurial 794

776 [53] Martı́n-Peña ML, Sánchez-López JM, Dı́az-Garrido, E. orientation, intellectual capital, IT capability, anc perfor- 795

Servitization and digitalization in manufacturing: The influ- mance. Human System Management. 2019;38:297-312. 796

tho
d Au
cte
rre
co
Un