Digitalization in the Public Sector: Unravelling (Un)Conditional Effects of E-Government on the Absorption of European Cohesion Policy

This paper contributes to the recent empirical literature on the absorption determinants of the European Cohesion Policy (ECP). In particular, it attempts to verify the effect of the digitalization of the public sector in the form of e-government services on the ECP absorption rates during the period 2007-2016. Using the fixed effects panel models, we confirm that increased usage of e-government services is associated with higher absorption rates of the beneficiaries. Moreover, we reveal its conditional effects in connection with government quality, human capital, and recessionary periods. While its positive effect is neutralized in the recession, the benefits of the e-government use towards ECP absorption are more pronounced at a higher level of government quality and a share of skilled labor. The results therefore suggest that the promotion of digitalization and training can not only promote economic growth and innovation as commonly known but, as the analysis shows, can also be valuable in terms of ECP absorption rates.