The impact of digital economy on employment polarization: an analysis based on Chinese provincial panel data

ABSTRACT In the digital economy era, researchers believe that the development of the digital economy has benefitted the labor market. However, by 2019, employment polarization was as high as 94.74% in China, and middle- and low-skilled workers faced severe employment challenges. Therefore, this study aims to explore the impact and mechanisms of the digital economy on employment polarization. To this end, data were collected from 30 Chinese provinces between 2014 and 2019. The results show that the digital economy’s development has intensified job market polarization. Technological innovation further intensifies the structural imbalances of the digital economy’s labor market, leading to employment polarization. However, the information effect and efficient government governance help alleviate the digital economy’s employment polarization. This study advances the focus on employment equity and opportunities for low-and middle-skilled employees.