This study aims to systematically evaluate how the urban digital economy influences the decision-making process of labor migration across regions. By matching individual migration data of intercity movements during 2012–2016 from the China Migrants Dynamic Survey (CMDS) conducted between 2013 and 2017 with the urban digital economy level and incorporating sampling data from the 2010 and 2015 population censuses, we construct a bidirectional flow analysis framework to identify the transmission pathways through which the urban digital economy influences population reallocation. The findings indicate that the development of the urban digital economy significantly increases the capacity to absorb external labor, resulting in a population stabilizing effect, particularly in small and medium-sized cities. The primary mechanisms include the increase in employment opportunities and public service provision, reflecting the pro-poor nature of the digital economy. Heterogeneity analysis further reveals greater benefits for women and cities with weaker resource endowments, supporting the applicability of the “latecomer advantage” of the digital economy in Chinese cities. This research provides empirical evidence and policy implications to promote labor mobility and rational allocation in the digital age.
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