Labor protection and enterprise digital transformation: A quasi-natural experiment based on the enforcement of Social Insurance Law in China

Abstract

This study examines the impact of Social Insurance Law in 2011 on enterprises' digital transformation, using a quasi-natural experiment with difference-in-differences method. Implementation of the law contributes to enterprises' digital transformation. Mechanism tests reveal that implementation of the law promotes enterprise digital transformation by increasing labor costs. Heterogeneity analysis demonstrates that nonstate enterprises, enterprises with weaker financing constraints, and mature enterprises experience a more pronounced impact of the law. Enterprises in regions with highly integrated digital development and those in industries with a high level of digital transformation are more affected by the law.