Does Digitalization Boost Unemployment: Spatial Effects and COVID-19 Case

Abstract

The labor market always presupposes a collision of the supply and demand forces. Sharp fluctuations in the economic environment can reduce the demand for labor. In the article, the authors discuss how digitalization changes the labor market, increases its efficiency, but also creates negative effects for its equilibrium. The purpose of the study is authors` measurement of the impact of digitalization of households on the unemployment rate, taking into account the spatial heterogeneity of Russian regions on panel data for two periods: 2016-2019 and 2020-2021. We used Moran and Geary spatial correlation indices, an econometric model with spatial lags, and the maximum likelihood method. Also, we show clustering of Russian regions by unemployment rate, strengthening of spatial cooperation of regions by unemployment rate and digitalization of households during the coronacrisis. The findings distinguish that the influence of digitalization of households on the reduction of unemployment existed during the coronacrisis, and it absented in the period preceding the pandemic. The scientific novelty of the study is the measuring the impact of household digitalization on the unemployment rate in the regions of Russia, taking into account spatial effects. The main conclusions of the investigation can be used in scientific and practical activities for the implementation of institutional measures for the development of regional labor markets, considering spatial differentiation of Russian regions.