The AI Redemption: How technology is rewriting the rules of cross-industry labor mobility

Su Zhang, Xiaolin Wang, Yan Xia and Huijuan Wang

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study considers the evolution and iteration of digital technology, conducting both theoretical and empirical research on the effects of information technology and artificial intelligence technology on cross-industry labor mobility. Theoretically, we construct a general equilibrium model that includes labor and digital technology to analyze the intrinsic mechanisms by which digital technology affects cross-industry labor mobility. Empirically, using the probit model and the instrumental variable approach, we find robust evidence of a significant positive effect of digital technology on cross-industry labor mobility through the pooled four-wave data from the China Family Panel Studies (CFPS) from 2014 to 2020. The findings indicate that digital technology significantly promotes cross-industry labor mobility. Mechanism analysis reveals that information technology, represented by computers, drives low-skilled labor towards non-skill-intensive industries through substitution and productivity effects, while artificial intelligence technology promotes the flow of both low-skilled and high-skilled labor towards skill-intensive industries through “de-skilling” and “re-skilling”. The impact of digital technology on cross-industry labor mobility varies significantly across different genders, the type of hukou, age, and employment types. Further mechanism analysis suggests that digital technology facilitates higher wage gains by promoting cross-industry labor mobility.

Keywords: Digital technology; Information technology; Artificial intelligence technology; Cross-industry mobility (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025007385

DOI: 10.1016/j.iref.2025.104575

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