Digital Economy, Declining Demographic Dividend and Rights of Low- and Medium-Skilled Workers

In the context of the digital economy and the decline in the demographic dividend, how have the rights of low- and medium-skilled workers changed? This study uses cross-sectional data from the China Household Income Project (CHIP) in 2002, 2007, 2008, and 2013, employing a two-way fixed effects model to answer the research question. The findings are as follows: First, the development of the digital economy has reduced the relative income rights of low- and medium-skilled workers but improved their relative welfare. Second, the efficiency gains and industrial intelligence resulting from the digital economy’s factor reorganization and reallocation have weakened the relative income rights of low- and medium-skilled workers, but they have enhanced their relative welfare through digital governance models. Third, the labor shortage effect due to the decline in the demographic dividend primarily affects low- and medium-skilled workers, particularly those with low skills, leading to a supply trap. Fourth, in the context of declining demographic dividends, the development of the digital economy has only diminished the rights of low-skilled workers. This suggests that the substitution effect of low-skilled labor caused by the digital economy far outweighs the labor shortage effect due to the decline in the demographic dividend, and the impact of individual endowments, macroeconomic conditions, and government governance levels on the rights of low-skilled workers varies significantly.