Digital Economy and Pathways to Common Prosperity: An Analysis through the Lens of Migrant Populations
YU Jingwen, LI Yuanyuan, TAN Jing, WANG Xun
Center for Economic Development Research, Wuhan University; Economics and Management School, Wuhan University;
Economics School, Shanghai University;
National School of Development, Peking University
Summary:
Migrant populations constitute a crucial component of China's economy and represent both a key focus and challenge in achieving common prosperity. Compared to local residents, migrants face cultural and resource barriers, as well as labor market discrimination due to the hukou system, placing them at a natural disadvantage in securing local employment and entrepreneurship opportunities. A significant proportion of migrants engage in survival-oriented entrepreneurship, which impedes overall income growth and hinders the optimization of income distribution structures. In recent years, China's digital economy has experienced rapid growth, emerging as one of the most dynamic sectors in the country's economic development. This digital transformation has catalyzed transformative changes in production processes, consumption patterns, and business models. Concurrently, it presents both opportunities and challenges for the labor market. While existing literature has examined the impact of the digital economy on residents' income and employment, few studies have explored the intrinsic mechanisms through which the digital economy contributes to common prosperity, particularly from the perspective of migrant populations. This paper aims to investigate the mechanisms and pathways through which the digital economy facilitates common prosperity, focusing on the employment behaviors of migrant populations. Theoretically, the digital economy alters the employment patterns of migrant populations by facilitating information circulation and enhancing the business environment, thereby impacting the labor supply and demand sides and ultimately elevating the income levels of migrant workers. Further research reveals that the digital economy also exhibits a distributional effect. By reducing the level of information asymmetry between migrant and local populations, it creates job opportunities that are more aligned with the skills and needs of migrant workers, thereby narrowing the gap in employment patterns between these two groups and mitigating income inequality. Based on the exogenous shock of the “Broadband China” initiative, this paper employs a difference-in-differences model using data from the China Migrants Dynamic Survey from 2011 to 2018. This paper investigates the mechanisms and pathways through which the digital economy contributes to common prosperity, from the perspective of migrant populations. Our findings indicate that the development of the digital economy has significantly boosts migrant incomes. The underlying mechanism appears to be that digital economic development facilitates information flow and creates an improved business environment, enabling migrant populations to access a broader range of employment opportunities. This, in turn, allows them to shift from low-quality, survival-oriented entrepreneurship, leading to income growth. Further analysis reveals significant distributional effects of digital economic development. Not only does it reduce income inequality within the migrant population, but it also narrows the income gap between migrants and residents. Moreover, we find that digital economic development significantly increases migrants' willingness to settle long-term in their host cities. This study has several policy implications as follows: Firstly, developing digital infrastructure construction enhances information transmission efficiency. Governments should prioritize the development of digital infrastructure such as 5G networks and data centers, with a particular focus on improving network coverage and information transmission efficiency in areas with high concentrations of migrant populations. This will unlock the labor supply potential of migrant workers. Secondly, encouraging enterprises to improve the business environment through digital adoption boosts labor demand. Relevant authorities should increase support for digital transformation in industries, especially labor-intensive sectors, and utilize digital financial tools to reduce borrowing barriers for small and medium-sized enterprises. This will improve the business environment and stimulate labor demand. Thirdly, promoting the deep integration of the digital economy with employment services is essential. On the one hand, efforts should be intensified to provide digital skills training to migrant populations, helping them adapt to the demands of the digital economy. On the other hand, the construction of digital employment service platforms should be strengthened, utilizing financial technology to enhance employment information platforms for migrant workers. This will fully leverage the positive role of digital finance in facilitating the digital upgrade of employment services. This paper makes three primary contributions to the existing literature: First, we provide novel empirical evidence on the impact of the digital economy on national economic outcomes from the perspective of common prosperity. While previous studies have primarily focused on the effects of the digital economy on residents' income and employment, we extend this analysis by examining the income distribution effects on migrant populations within the framework of common prosperity. Second, we elucidate the intrinsic mechanisms through which the digital economy contributes to common prosperity, specifically considering the characteristics of migrants. Our study explores how the digital economy influences migrants' income through both labor demand and supply channels, thus complementing existing research on the distributional effects of the digital economy on migrants. Third, we enrich the literature on the impact of the digital economy on the social integration of migrant populations. By incorporating settlement intentions into the framework of the digital economy's effects on common prosperity, and combining it with analysis of migrant's income and employment patterns, we provide interconnected empirical evidence on changes in employment modes, income growth, reduced income disparities, and increased settlement intentions. These mutually corroborating findings suggest that the digital economy contributes significantly to the realization of common prosperity.
余静文, 李媛媛, 谭静, 王勋. 数字经济背景下的共同富裕实现机制研究——基于流动人口视角的诠释[J]. 金融研究, 2024, 532(10): 20-38.
YU Jingwen, LI Yuanyuan, TAN Jing, WANG Xun. Digital Economy and Pathways to Common Prosperity: An Analysis through the Lens of Migrant Populations. Journal of Financial Research, 2024, 532(10): 20-38.
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