Big data development and labor income share: Evidence from China's national big data comprehensive pilot zones

Abstract

In the midst of the rapid development of the digital economy, data has emerged as a new core production factor. It not only creates value for producers but also benefits the majority of ordinary workers, playing a crucial role in optimizing income distribution and promoting common prosperity. Utilizing data from Chinese A-share listed companies from 2012 to 2021, this study evaluates the impact of big data development on the labor income share of enterprises, employing the establishment of China's national big data comprehensive pilot zones as a quasi-natural experiment. Additionally, it examines the heterogeneity of this impact across regional, industry, and firm levels. The findings reveal that big data development significantly increases the labor income share of firms, mainly through mitigating labor mismatch, improving innovation capability, and upgrading human capital. Heterogeneity analysis shows that big data development exerts a stronger effect on eastern and labor-rich regions, high-tech and non-labor-intensive industries, big-data industries and low-competition industries, as well as state-owned and mature enterprises. This study provides policy insights on fully harnessing the benefits of big data pilot policy to increase labor income share, with important implications for developing countries.