The effect of digitalized economic structure on labor market: An application on European Union

The first industrial revolution, which is regarded as the beginning of industrialisation, has been followed by the second, third, and finally, the fourth industrial revolution, which is now associated with digitalization due to the technologies it has brought. They have all created massive changes on both the economy and social life. Today the concept of digitalisation also affects workforce market as a result of the widespread use of the fourth industrial revolution technologies. This study analyses the process of industrial revolutions before focusing on social change, the economic effects of digitalisation and its effects on labor markets. Finally, the study evaluates the digitalisation process in European Union. The employment rates of the European Union countries between 2002-2018 have been received through the International Labor Organization (ILO) website according to profession codes. They have been classified as "cognitive", "manual", and "routine" based on the Routine Task Intensity (RTI) index, and the dependent variable of the three separate models used in the analysis has been formed. The relationship between digitalisation and European Union's cognitive, manual, and routine employment rates has been analysed through dynamic panel data analysis on three separate models, using system GMM predictor. This result shows that digitalisation on labor is complementary for cognitive professions, while it is substitutionary for routine ones.