The Impact of Differentiated Development of the Digital Economy on Employment Quality—An Empirical Analysis Based on Provincial Data from China
Authors: Liu Tongyang , Xue Dong , Fang Yizhuo , Zhang Kunpeng 
Published: September 2023

In the context of the digital age, the digital economy, as a new economic model that the Chinese government is currently committed to developing, has played a positive role in driving consumption and creating employment opportunities. However, the differential development characteristics of the digital economy are becoming increasingly evident. The level of digital infrastructure and the application of digital facilities in China’s eastern regions are superior to those in the central and western regions. The increasing level of differential development in the digital economy will further accelerate the cross-regional mobility of labor. For the more developed eastern regions in China, in terms of the digital economy, the ability to empower employment is relatively high, which can create more job opportunities and attract a larger labor force seeking employment opportunities. In contrast, the central and western regions face slower development in the digital economy and relatively insufficient employment-empowering capacity, leading to labor force outflow. Proper cross-regional labor mobility can enhance the efficiency of labor resource allocation. However, excessive labor force mobility can lead to imbalanced labor resource allocation, causing job shortages and reduced employment quality in regions with an excess of labor force, while labor loss regions face labor shortages and talent drain, resulting in a loss of economic vitality in those regions. Therefore, clarifying and addressing the various negative impacts brought about by the differential development of the digital economy are crucial for improving the overall employment quality in the digital economy era. However, there is currently limited research focused on the influence of differential development levels of the digital economy on employment quality. This study delves into the impact of the differential development levels of the digital economy on employment quality and analyzes the underlying mechanisms. Based on panel data from 31 provinces and cities in mainland China from 2011 to 2020, this study uses the entropy method to calculate both the employment quality index and the digital economy index. Building upon the digital economy index, the Gini coefficient of the digital economy development level in various regions in China is calculated using the Gini coefficient formula. Subsequently, a two-way fixed-effects model empirically analyzes the impact of China’s differential development levels in the digital economy on employment quality. The research finds that the improvement in China’s differential development level in the digital economy significantly reduces employment quality. After re-calculating the Gini coefficient and the employment quality index using principal component analysis, it is found that the Gini coefficient of the digital economy still has a significantly negative impact on the employment quality index. After conducting 2SLS regression using instrumental variables, it is confirmed that there is still a significant negative correlation between the Gini coefficient of the digital economy and the employment quality index. According to the regression results, for every 1% increase in the Gini coefficient of the digital economy, the employment quality index will decrease by 0.111% to 0.361%. Through a regression analysis of the mechanism of action, it is found that the industrial structure plays an intermediary role in the impact of the differential development levels of the digital economy on employment quality. The improvement in the differential development levels of the digital economy is unfavorable for the transformation and upgrading of the industrial structure in the central and western regions, as well as the rational development of China’s overall industrial structure, thereby affecting the improvement of employment quality. Based on the above empirical results, the following policy recommendations are proposed: 1. The Chinese government should increase fiscal support for digital infrastructure construction in the central and western regions, continuously narrowing the gap in digital economy development levels between regions. 2. Regional governments in China should actively guide the healthy upgrading of industrial structures based on the actual conditions of each region. 3. In the digital economy era, the government should introduce relevant labor protection and social security policies based on the characteristics of emerging professions to further improve the employment quality of workers in the digital economy era.