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Does digital technology innovation enhance firm productivity? The role of labor force dynamics

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  • Li, Xiang
  • Yue, Shujing
  • Guo, Lixiang
  • Liu, Ting

Abstract

Digital technology innovation (DTI) is widely recognized as a key driver of enterprise transformation, yet existing studies have not clearly integrated labor force dynamics and firm productivity within a unified analytical framework. This study examines whether DTI enhances firm productivity using a panel of Chinese listed firms from 2010 to 2022. Employing fixed-effects models, we find that DTI significantly improves productivity. Moreover, the productivity gains from DTI are realized through optimizing labor allocation and adjusting labor skill structure. The positive effects are particularly pronounced in high-tech industries, firms receiving greater government attention to digitalization, and firms with stronger labor protection. These findings provide policy-relevant evidence supporting digital technology innovation, supply-side reforms in digital skills, and the promotion of high-quality firm growth.

Suggested Citation

  • Li, Xiang & Yue, Shujing & Guo, Lixiang & Liu, Ting, 2026. "Does digital technology innovation enhance firm productivity? The role of labor force dynamics," Economic Analysis and Policy, Elsevier, vol. 91(C), pages 1164-1176.
    • Handle: RePEc:eee:ecanpo:v:91:y:2026:i:c:p:1164-1176
    DOI: 10.1016/j.eap.2026.04.012
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