The impact of digital infrastructure on labor productivity

Abstract

The enhancement of labor productivity is a critical determinant of economic growth and plays a key role in intensifying global competition. The study employs a staggered difference-in-differences model to evaluate the impact of the Broadband China policy on labor productivity, using panel data from 280 cities from 2011 to 2021. The results show that: (1) The Broadband China policy has a significant positive effect on labor productivity, with the conclusion holding after a series of robustness checks. (2) Mechanism analyses indicate that the primary channels through which the policy promotes labor productivity are the alleviation of labor mismatch, the enhancement of urban innovation capacity, and the upgrading of human capital. (3) Heterogeneity analyses suggest that the policy's effect on labor productivity is more pronounced in regions with higher levels of marketization, industrial clustering, and industrial structure, compared to regions with lower levels of these factors. This study provides valuable insights into the optimal utilization of digital infrastructure to enhance labor productivity.