IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v85y2025icp2007-2029.html
   My bibliography  Save this article

The good, the bad: How digital technology shapes welfare for formal and flexible workers?

Author

Listed:
  • Zhang, Su
  • Xia, Yan
  • Wang, Huijuan
  • Pan, Jiaofeng

Abstract

Digital technology has a profound impact on China's labor market. How does the welfare inequality between formal and flexible workers change under the influence of digital technology? In this paper, theoretical and empirical studies are carried out respectively. In theory, the welfare effect of individual dimension is considered based on building a general equilibrium model including market production sector and household production sector; In the empirical aspect, the pooled four-wave data from the China Family Panel Studies (CFPS) from 2014 to 2020 are used to test the effects of digital technology on the welfare inequality between the formal and flexible workers. The findings reveal that digital technology widens wage disparity and non-wage benefit inequality between formal and flexible workers. Sectoral analysis indicates that digital technology significantly increases wage disparity in high-digitalization sectors, while non-wage benefit inequality is primarily exacerbated in low-digitalization sectors. Mechanism analysis demonstrates that the substitution effect and productivity effect negatively impact wage disparity, whereas the creation effect and the flexibility of flexible workers mitigate it. Regarding non-wage benefit inequality, digital skill gaps caused by digital technology exacerbate inequality, while legal efficiency and regulatory quality help alleviate it. In addition, the wage disparity and non-wage benefits inequality between the formal and flexible workers caused by digital technology are significantly different in different education levels, gender, time and regions.

Suggested Citation

  • Zhang, Su & Xia, Yan & Wang, Huijuan & Pan, Jiaofeng, 2025. "The good, the bad: How digital technology shapes welfare for formal and flexible workers?," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 2007-2029.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:2007-2029
    DOI: 10.1016/j.eap.2025.02.037
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592625000669
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2025.02.037?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:2007-2029. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.