International comparison of the impact of digital transformation on employment

Theoretical analysis in this paper examines the impact of digital transformation on employment and its transmission mechanisms. It proposes that regional characteristics, such as market size, industry structure, and labor structure, are important factors influencing the employment effect of digital transformation. Empirically, this paper analyzes the employment effect of digital transformation using economic panel data from 68 countries spanning the years 2013–2019 and finds that: 1) In terms of employment, digital transformation is dominated by the substitution effect. In terms of wages, digital transformation presents wage-rising effects. 2) Large market size and advanced industry structure significantly mitigate the employment substitution effect and enhance the wage-rising effect. 3) The skillization of labor structure has no significant impact on the employment substitution effect of digital transformation, but it significantly enhances the wage-raising effect. 4) Developing countries experience a more pronounced employment substitution effect from digital transformation, while developed countries witness a more prominent wage-increasing effect. The robustness of these results has been confirmed after introducing a one-period lag in the explanatory variables and utilizing instrumental variables. These findings of this paper offer valuable insights for achieving a balance between equity and efficiency in the context of digital transformation.