Digital Readiness and Public Education Expenditure in the European Union: Evidence from Panel Data

Digital transformation has become a strategic priority across the European Union, yet evidence on its relationship with public education investment remains limited.This study examines the association between digital readiness and public education expenditure in 26 EU countries from 2015 to 2022.We construct a composite Digital Readiness Index (DRI) from internet use and the share of information and communication technology specialists in total employment.The analysis uses pooled Ordinary Least Squares, Random Effects, Country Fixed Effects, and Two-Way Fixed Effects models, with country-clustered HC1 standard errors for the main inference.In the preferred Two-Way Fixed Effects specification, the DRI is positively associated with public education expenditure (β = 2.056, SE = 0.903, p = 0.024), implying that a 0.10point increase in the DRI is associated with approximately 0.21 percentage points higher education expenditure as a share of gross domestic product.The positive association persists across several sensitivity analyses, although its statistical strength weakens under more conservative inference, additional fiscal controls, and an alternative expenditure measure.The findings support a positive conditional association between digital readiness and public education expenditure but do not establish causality.