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Economic forces and the employment paradox in the digital industry: creation and substitution effects from the perspective of supply chains

Author

Listed:
  • Yin, Xiang
  • Yang, Yan-Lin
  • Chang, Chun-Ping
  • Fu, Qiang

Abstract

The research on the employment effect of the digital economy not only requires grasping the macro trends but also delving into the micro mechanisms. This study examines the impact of digital enterprise growth on labor employment in the supply chains of upstream and downstream enterprises, exploring the micro-logic of how the development of the digital industry affects employment levels. Our findings suggest that the growth of digital enterprises has a significant negative impact on the employment of their supply chain partners. Currently, the level of digital coordination within supply chains remains relatively low, which limits the job creation potential of digitalisation. Heterogeneity analysis reveals that this suppressive effect is particularly pronounced for digital enterprises in the eastern region, those in the digital technology application sector and technology-intensive enterprises. Conversely, digital enterprise growth in the central region appears to promote supply chain employment. Based on these findings, the paper proposes targeted policy recommendations.

Suggested Citation

  • Yin, Xiang & Yang, Yan-Lin & Chang, Chun-Ping & Fu, Qiang, 2026. "Economic forces and the employment paradox in the digital industry: creation and substitution effects from the perspective of supply chains," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 882-899.
    • Handle: RePEc:eee:ecanpo:v:89:y:2026:i:c:p:882-899
    DOI: 10.1016/j.eap.2025.12.035
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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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