The moderating role of governance quality in the relationship between artificial intelligence and youth unemployment
Published: October 3, 2026
Abstract
This study examines the moderating role of governance quality in the relationship between artificial intelligence (AI) and youth unemployment. The empirical analysis uses panel data comprising 462 observations from 120 countries during 2021–2024. AI penetration is measured using the Future Technologies sub-index of the Network Readiness Index (NRI), while governance quality is measured through three pillars: trust, regulation, and inclusion. Fixed-effects estimation with Driscoll–Kraay standard errors shows that AI adoption is negatively associated with youth unemployment. The interaction between AI and governance quality is also negative and statistically significant, suggesting that the association between AI adoption and lower youth unemployment is stronger in countries with higher governance quality. The findings highlight the importance of governance for labor market outcomes during digital transformation.
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