Digital infrastructure and employment in services: Evidence from Sub-Saharan African countries

Abstract

The recent boom of the services sector, especially in developing countries, coincides with the rise of digital technologies. While the former might be attributed to the latter, empirical analysis of this relationship is still limited. This paper fills this gap by examining the effect of digital infrastructure on services sector employment. Employing a panel data comprising 45 Sub-Saharan Africa countries over the period 1996–2017, we find that digital infrastructure contributes positively to services sector employment. However, further analyses reveal that the positive effect of digital infrastructure on services sector employment depends on education, institutional quality, and macroeconomic conditions as captured by the inflation rate. In particular, we find that the positive effect of digital infrastructure on services sector employment increases as institutional quality becomes better, while poor macroeconomic conditions decrease the effect of digital infrastructure on employment in services. We also find evidence suggesting that the effect of digital infrastructure on employment in the services sector tends to benefit countries at low levels of education.