Investigating the Impact of Digital Transformation on the Labor Market in the Era of Changing Digital Transformation Dynamics in Saudi Arabia

Masahina Sarabdeen () and Hind Alofaysan
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Masahina Sarabdeen: Department of Economics, College of Business and Administration, Princess Nourah bint Abdulrahman University, Riyadh 11617, Saudi Arabia
Hind Alofaysan: Department of Economics, College of Business and Administration, Princess Nourah bint Abdulrahman University, Riyadh 11617, Saudi Arabia

Economies, 2023, vol. 11, issue 1, 1-14

Abstract: In Saudi Arabia, limited studies have developed models related to measuring the impact of the digital economy on the labor market. This model concerns the agricultural, service, and industrial sectors in Saudi Arabia. This study further investigates the relationship between digitalization, labor productivity, and unemployment using the ARDL error correction method for time-series data obtained from the World Bank database for the period of 2001–2019. The findings of this study illustrate, digital variables such as fixed broadband subscriptions (LNFBS), mobile cellular subscriptions (LNMCS), and computer, communications, and other services (LNCCO) do not significantly affect the labor market in the agricultural sector. LNMCS and LNCCO do not influence the service sector. However, they are negatively influencing the industrial sector and labor productivity. In contrast, LNFBS has a positive impact on both the service and industrial sectors. Interestingly, all three digital variables significantly reduce unemployment in the long run in Saudi Arabia. However, in the short run, digitalization does not have a positive impact on the economy. This study hopes to benefit policymakers in considering how to reorganize the socioeconomic infrastructure to balance economic growth through greater technology and the utilization of the country’s human resources.

Keywords: digital transformation; labor market; labor productivity; unemployment; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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