Endogenous Economic Growth in the Digital Age: A Neo-Solow-Romer Analysis of the Impact of Technology on the Transformation of the Labor Market

Abstract

The author addressed the Solow model, which is the basis for many studies on economic growth in the digital age, highlighting the role of physical and technological capital accumulation. In the digital age, endogenous economic growth, analyzed through the lens of neo-Solow-Romer, emphasized the technological impact on the transformation of the labor market. The Solow model shows that diminishing returns on capital limit economic growth, and exogenous technological progress becomes the main driver of economic development in the digital age. Modern theories integrate investments in research and development (R&D) and education, which stimulate technological progress and maintain long-term economic growth in the digital age. Thus, the technological impact has not been passive in the digital age, but the result of essential actions for competitiveness and sustainable productivity in the labor market. Endogenous economic growth in the digital age has reflected a new paradigm, in which technology and human capital have been the central pillars of economic development and labor market transformation. In the digital age, the labor market in the Republic of Moldova is changing rapidly, with advanced technologies enabling the storage, processing, and presentation of information necessary for various occupations. Although many employees have digital skills, current jobs often require additional training to meet requirements, which has led to the transformation of the labor market. This transformation depends on the capacity of human and physical capital, and the field of activity. Exogenous economic growth in this era effectively integrates automation and digitization, thus adapting employees’ occupations to new technological realities. The author highlights, based on a questionnaire conducted among a group of people, that in the digital age, technology plays an important role in managing employees’ work. Thus, digital activities have enabled employees to better organize their work, offering them more flexibility and increasing productivity. However, this transformation has brought with it a significant risk, such as technical unemployment, caused by the replacement of traditional occupations through automation and digitization.