Threshold effects of the digital economy on youth employment in Africa

Africa has seen the rapid diffusion of information and communication technologies over the past two decades. This rapid diffusion has raised concerns about job losses in companies due to these technologies. To address this, this research aims to analyze the nonlinear effects of the digital economy on youth employment in Africa. To achieve this goal, a dynamic panel threshold effects model estimation technique was applied to data from 44 African countries spanning the period from 2003–2023. After estimation, the results indicate a U-shaped relationship between the digital economy and youth employment in Africa. African countries must reach a digital economy diffusion threshold of 107.33% for it to begin to have a tangible impact on youth employment. Therefore, these results suggest that African countries should continue to develop digital infrastructure to surpass various thresholds, enabling the digital economy to become a long-term source of employment for young people.