The Impact of Digital Capabilities on Peasants’ Wage Growth: Evidence from Chinese Farmer Entrepreneurs

Abstract

The gradual integration of digital technology into traditional Chinese villages has triggered a shift in income distribution from labor to capital, posing challenges to the wage growth of employed peasants. Based on the theory of empowerment, this paper explores the mechanisms of credit availability and talent loss in the interplay between digital capabilities and wage augmentation among employed peasants. This study empirically examines or validates the mechanism of digital capabilities on wage growth for employed peasants through the entropy weight method, the OLS linear model, the mediation effect model, and propensity score matching while using survey data from 490 farmer entrepreneurs as samples. The findings are as follows. (1) The digital capabilities of farmer entrepreneurs have a significant positive impact on the wage growth of employed peasants, and this result remains robust after a series of robustness checks. In terms of hierarchical effects, digital foundational capabilities > digital application capabilities > digital innovation capabilities. (2) Credit availability and talent loss mediate the relationship between digital capabilities and wage growth for employed peasants. (3) The digital capabilities of farmer entrepreneurs who are young, highly educated, and have a low family-dependency ratio exert a more pronounced influence on the wage growth of employed peasants. Additionally, lower policy uncertainty enhances the effect of digital capabilities on wage growth for employed peasants. The study uncovers the empowerment mechanism of digital advancements embedded during the entrepreneurial journey, enriches research on digital capabilities and common prosperity, and provides a feasible path for governments to formulate reasonable entrepreneurship and digital promotion policies.