 Does digital transformation increase the labor income share? From a perspective of resources reallocationChuanglian Chen, Shudan Wang, Shujie Yao and Yuting Lin Economic Modelling, 2023, vol. 128, issue C Abstract: Digital technology has led to a new wave of industrial revolution, affecting resource reallocation, especially labor employment and income. While extant studies have primarily focused on the influence of digital transformation on firm performance, little attention has been paid to its impact on labor income. This study establishes a theoretical model to analyze the relationship between digital transformation and labor income, using a large panel dataset comprising China's listed firms in 2005–20 for empirical test. The theoretical framework integrates digital transformation as an expanded technology of labor and capital into a firm-level production function. The empirical results show that digital transformation has a significant substitution effect on labor, leading to a contraction in its income share. This effect is particularly pronounced in the western region and manufacturing sector. This study suggests that governments at all levels should pay attention to workers' welfare when firms implement digital transformation to improve productivity. Keywords: Digital transformation; Labor income share; CES function; Artificial intelligence; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:128:y:2023:i:c:s0264999323002869 DOI: 10.1016/j.econmod.2023.106474 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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