Modelling the impact of digital technologies on the unemployment rate in Russia

Abstract

The paper examines labor market patterns in the light of digital economy development. The aim is to analyze labor market conjuncture in terms of registered unemployment dynamics. The degree of digital economy development is assessed through three indicators: the share of organizations using (1) the Internet, (2) local area networks, (3) number of personal computers per 100 employees. In addition to technological development indicators, the article also makes account of certain demographic factors. Since early 2000s, the degree of Internet penetration in organizations has doubled, while the number of computers increased threefold. The share of elderly population and life expectancy rate have increased by 5 percent and 7 years respectively. Drawing on econometric panel data models regarding federal districts in Russia for 2003–2019, the author provides the following findings. First, the proliferation of technological advances reduces unemployment rate. Second, an increase in the proportion of population above working age and life expectancy entails the reduction in unemployment rate. Third, combined effect of technological and demographic factors increases unemployment rate. The magnitude of the reduction exceeds the degree of increase in the unemployment rate due to technological advances. Thus, technological unemployment is more likely a theoretical possibility. Fourth, the determinants taken into consideration explain from 38 to 43 percent of unemployment rate change. The proposed approach can be applied in designing regulatory policies regarding employment with regard to the implementation of digital technologies in organizations and population aging in Russia’s regions.