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Can government digital governance alleviate factor market distortions?

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  • Zhou, Yuanyuan
  • Ge, Hongyu

Abstract

This paper focuses on the core question of whether and how government digital governance can alleviate factor market distortions. Empirical testing is conducted using panel data from 31 Chinese provinces spanning 2011 to 2023. The findings reveal that government digital governance significantly suppresses factor market distortions. Foreign direct investment strengthens the corrective effect of government digital governance, while digital inclusive finance effectively transmits the optimizing impact of digital governance on factor allocation. Furthermore, heterogeneity analysis indicates that the suppressive effect of digital governance is more pronounced in economically advanced regions with well-established legal systems.

Suggested Citation

  • Zhou, Yuanyuan & Ge, Hongyu, 2025. "Can government digital governance alleviate factor market distortions?," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325020720
    DOI: 10.1016/j.frl.2025.108818
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    Keywords

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    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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