Digitalization, technological advancement, green transition and labor market: an exploratory study in four Western Balkan countries

Purpose This exploratory study analyzes the relationship between selected indicators – digitalization, technological upgrading and green transition – and labor market outcomes in four Western Balkan countries – North Macedonia, Albania, Montenegro, and Bosnia and Herzegovina – considering macroeconomic factors. Design/methodology/approach The study analyses unemployment and employment (robustness) as dependent variables, along with macro controls (GDP per capita, trade openness, inflation and urbanization) and extended controls (gross capital formation and remittances). The explanatory variables include digitalization, proxied by individuals' Internet usage; technological upgrading, proxied by high-technology exports; and the green economy, proxied by renewable energy consumption. The study investigates country-clustered robustness by using Pooled OLS Robust, Random Effects Robust and Fixed Effects Cluster-Robust, selecting the appropriate model based on the Hausman test and panel-data diagnostic tests to assess heteroskedasticity and serial correlation, respectively, Modified Wald test and Wooldridge test. The data was collected from World Bank Indicators covering the period from 1999 to 2024. Findings Results suggest that digitalization, high-technology exports (a proxy for technological upgrading), renewable energy consumption, investment, institutional quality and overall economic performance are associated with labor market outcomes across the selected Western Balkan countries. Originality/value The study provides exploratory macro-level evidence from four Western Balkan countries on the challenges to labor-market dynamics, green transition and structural labor-market imbalances.