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Does digital transformation reduce the labor income share in enterprises?

Author

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  • Yang, Guang-Zhao
  • Si, Deng-Kui
  • Ning, Guang-Jie

Abstract

This paper investigates the impact of firms' digital transformation on labor income share utilizing a large sample of Chinese-listed enterprises from 2003 to 2020, and we find a negative correlation between digital transformation and enterprise labor income share. The results are robust to changing variable indicators, instrumental variable approach, and Difference-in-Difference method. The impact of enterprise digital transformation on labor income share is more pronounced for industrial industry, technology-intensive, and state-owned firms. Product market competition, employee wage bargaining power, and market size are essential in the relationship between enterprise digital transformation and labor income share. This study reveals that protecting employee rights and maintaining fair competition help weaken enterprise digital transformation's negative impact on labor income share.

Suggested Citation

  • Yang, Guang-Zhao & Si, Deng-Kui & Ning, Guang-Jie, 2023. "Does digital transformation reduce the labor income share in enterprises?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1526-1538.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:1526-1538
    DOI: 10.1016/j.eap.2023.10.025
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    More about this item

    Keywords

    Digital transformation; Labor income share; Commonwealth; Market monopoly;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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