Navigating Technological Change: The Role of Passive Social Policies in Central and Eastern European Labour Markets

Marius Kušlys; Simonas Čepėnas; Vincentas Vobolevičius; Tadas Šarapovas

doi:10.5755/j01.ee.36.3.40415

Authors

Marius Kušlys ISM University of Management and Economics, Lithuania
Simonas Čepėnas ISM University of Management and Economics, Lithuania
Vincentas Vobolevičius ISM University of Management and Economics, Lithuania
Tadas Šarapovas ISM University of Management and Economics, Lithuania

DOI:

https://doi.org/10.5755/j01.ee.36.3.40415

Keywords:

Technological Change, Digitalization, Employment, Social Protection Benefits

Abstract

Central and Eastern European (CEE) countries have limited research attention regarding the impact of technological change on the labour market. While existing studies offer many insights into developed countries, research on CEE countries, which have not yet achieved the level of prosperity seen in Western nations, does not take into consideration the following paradox – the existing labour force deficit and lack of technological innovation at the same time. This makes the region particularly valuable for the analysis in the context of technological change. Our study expands current theoretical understanding of the relationship between technological change and employment by examining the effects of passive labour market policies. The empirical analysis, using fixed-effects models, reveals that the overall effect of digitalization on employment is inconsistent, suggesting that the direct relationship between ICT capital and employment is not robust across specifications. This may result from the balancing of both positive and negative effects of technological change on the labour market. However, three models find a positive and statistically significant moderating effect of social protection benefits, while two showed insignificant estimates. This suggests that higher social protection can help mitigate digitalization’s negative employment effects by sustaining demand and supporting jobs in non-automated sectors.

Author Biographies

Marius Kušlys, ISM University of Management and Economics, Lithuania

Marius Kušlys is a senior lecturer and PhD candidate at ISM University of Management and Economics. Marius completed his undergraduate and postgraduate studies at ISM University of Management and Economics and has been working at ISM since 2016. His research interests focus on labor economics, political and macroeconomic effects of automation. In 2020, Marius participated in the LRC-funded research project “Industry 4.0: Addressing Challenges for Productivity, Employment and Inclusive Growth”, presented the results of the research to the Ministry of Economy and Innovation.

Simonas Čepėnas, ISM University of Management and Economics, Lithuania

Simonas Čepėnas, Dr., is an assistant professor at ISM University of Management and Economics. Simonas graduated from the University of Virginia (UVA) with a PhD in Foreign Affairs and Methods. His research and teaching interests include international relations, political economy, microeconomic theory and methods. Simonas has published and presented his research in peer-reviewed publications and international conferences, such as American Political Science Association (APSA) Annual Meeting.

Vincentas Vobolevičius, ISM University of Management and Economics, Lithuania

Vincentas Vobolevičius, Dr., is the director of Economics and Politics bachelor’s programme at ISM University of Management and Economics, specializing in political economy, post-communist transformations, public choice and statistical data analysis. Vincentas holds a Ph.D. in International Political Economy from New York University. In addition to teaching at ISM Vincentas has served as a member of the Central Electoral Commission of the Republic of Lithuania as well as a member of Lithuanian Radio and Television Commission.

Tadas Šarapovas, ISM University of Management and Economics, Lithuania

Tadas Šarapovas, Dr., is a Professor and Director of Economics and Data Analytics programme at ISM University of Management and Economics. Doctoral degree in Economics was awarded by Kaunas university of Technology in 2005, Master of Science degree in International Business Management awarded in 2000. He has experience in running and managing small and medium-sized private enterprises, developing international trade and production outsourcing projects since 1999. His teaching area is Microeconomics, while his research interests are primarily focused on topics of microeconomics: business efficiency, business internationalization, and crisis diagnostics in a firm.