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Original research
THE IMPACT OF DIGITALIZATION ON LABOR PRODUCTIVITY IN THE MANUFACTURING SECTOR: A PANEL DATA STUDY (2010–2023)Pages 241-258
Abstract:
This study examines the impact of digitalization on labor productivity in the manufacturing sector across 17 advanced industrialized countries over the period 2010–2023. Digitalization is captured through the percentage of Internet Users (IU) and the Digital Competitiveness Score (DCS). Using panel data techniques, three econometric models were estimated: Pooled Ordinary Least Squares (OLS), Fixed Effects (FE), and Random Effects (RE). Descriptive statistics reveal a weak association between digitalization indicators and labor productivity. Consistently across all model specifications, the empirical results indicate that neither IU nor DCS exerts a statistically significant effect on labor productivity during the study period. These findings support the existence of a Digital Productivity Paradox, suggesting that digital transformation does not automatically translate into productivity gains. The results highlight the dominant role of country-specific structural factors, including institutional quality, human capital, and industrial policy frameworks, in shaping productivity performance. The study recommends incorporating mediating mechanisms and time-lag effects in future research to better capture the indirect and dynamic impacts of digitalization.
Keywords: Digitalization, Labor Productivity, Manufacturing Sector, Panel Data, Fixed Effects.
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Yalouli Tarek, 
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