Digital Transformation of Enterprises and Share of Laebor Income: evidence from China

Abstract

Promoting the digital transformation of enterprises and increasing the proportion of labor remuneration in the initial distribution are necessary guarantees for constructing a modern economic system and realizing the essential requirements of socialism. Based on the data of A-share listed firms, the essay explores the impact of digital transformation on labor income share. It is shown that the digital transformation of enterprises significantly increases the share of labor income, which is still valid after dealing with endogenous problems and a series of robustness tests. The research also finds that the digital transformation of enterprises increases the proportion of high-skilled talents, and then increases the wage rate and labor productivity. Its positive effect on the wage rate exceeds the positive impact on labor productivity. Additionally, the essay points out that the impact on labor income share is more significant in non-state-owned firms, large-scale firms, firms located in the eastern and western regions, and firms belonging to high-tech industries. Finally, from the perspective of the specific content of the digital transformation of enterprises, the promotion effect of the application of digital technique on labour income share is the most evident. The findings help assess the impact of digital transformation on the share of labor income and provide policy implications for the two-way empowerment of the digital economy and common prosperity.