Digital transformation and income inequality within enterprises – Evidence from listed companies in China

Abstract

This study examines the influence of digital transformation on internal income inequality. The findings suggest that enterprise digital transformation has a discernible impact on reducing income inequality between managerial staff and ordinary employees. However, it also leads to an increase in income inequality between high-skilled and low-skilled employees. Mechanism tests reveal that enterprise digital transformation affects income inequality within firms by amplifying investments in research and development (R&D). Furthermore, during corporate digital transformation, a narrower compensation gap between the management and ordinary employees, as well as a wider compensation gap between high-skilled and low-skilled employees, significantly enhance corporate innovation performance.