FinTech and unemployment: New evidence on the role of labor market regulation

Siti Nurazira Mohd Daud, Abd Halim Ahmad, Irwan Trinugroho, Sulistya Rusgianto and Masagus M. Ridhwan

Research in International Business and Finance, 2025, vol. 79, issue C

Abstract: FinTech has changed the landscape of financial markets, with product and process innovation improving productivity and efficiency. However, concerns over technology replacing human roles have led to discussions in finding tolerance and formulating effective policy responses, particularly regarding labor market regulations. This study investigates the impact of FinTech and labor market regulation on unemployment across 65 countries from 2008 to 2020. This study constructs the FinTech indicator by employing an innovative web browsing technology method covering four dimensions: artificial intelligence, blockchain-related, cloud technology, and data technology. The System GMM (Generalized Method of Moments) estimation method was employed to examine the impact of FinTech and labor market regulation on unemployment, which accounts for endogeneity. The evidence indicates that FinTech has contributed to labor-creating effects, implying that it creates employment opportunities. Labor market regulation shapes employment dynamics, but certain aspects require stringent regulation while others benefit from deregulation. Our results are robust to alternative estimation methods, proxies, and sub-sample approaches. Our results highlight the importance of a regulatory framework combining flexibility with some regulations in specific sectors, and focused on safeguarding consumers and ensuring systemic stability. This balanced approach would foster innovation and skill development within the FinTech sector. Moreover, it will help harness the potential of FinTech to create employment opportunities, while effectively managing risks and facilitating a fair and inclusive transition for workers in the digital economy.

Keywords: FinTech; Unemployment; Labor market regulation; Labor-creating effects (search for similar items in EconPapers)
JEL-codes: D31 E24 G29 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531925003162
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003162

DOI: 10.1016/j.ribaf.2025.103060

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().