The Impact of Digital Economy Development on the Labor Employment Structure

Abstract

The rapid expansion of the digital economy has profoundly reshaped labor markets worldwide, introducing unprecedented transformations in how businesses operate and manage human resources. Yet, despite its growing importance, its systematic impact on the underlying employment structure remains insufficiently understood within contemporary academic literature. To address this critical gap, this study empirically investigates how digital economy development affects labor employment structure. The analysis utilizes comprehensive panel data comprising 2,847 Chinese A share listed companies spanning the period from 2012 to 2022, meticulously matched with prefecture level city digital economy indices to ensure robust geographical and temporal coverage. Employing rigorous fixed effects models alongside instrumental variable approaches to mitigate potential endogeneity, the research yields three main findings. First, digital economy development exhibits a distinct U shaped relationship with enterprise labor demand, initially suppressing employment scale due to automation before subsequently promoting it through the creation of novel roles. Second, the digital economy significantly alters the internal employment structure by substantially increasing the share of high skilled labor while simultaneously reducing the proportion of low skilled labor, thereby demonstrating clear evidence of skill biased technological change. Third, the impact varies considerably across different industries; manufacturing firms experience stronger demand for research and development personnel to drive innovation, whereas service sector firms show increased demand for specialized sales and technical positions. Ultimately, these findings provide important policy implications for managing employment transitions, fostering workforce upskilling, and ensuring sustainable economic growth in the digital era.