Digitalization of industries and labor mobility in China

The paper utilizes data from the China Family Panel Studies (2014–2018) and China's Input-Output Table to investigate how digital development affects labor mobility decisions at industry level. Our findings demonstrate that the increased levels of digitalization, both in manufacturing and services dimensions, significantly boost the likelihood of labor mobility across industries. This relationship remains valid even after considering endogeneity issues. Mechanism analysis shows that digitalization affects the cross-industry mobility decision of workers by affecting the quality of skill matching, income level, and occupational prestige. The heterogeneous results show that the impact of digital development on industry mobility decisions in the overall and manufacturing dimensions exists in the labor force in economically underdeveloped regions, the labor force engaged in consumer services, and entrepreneurs. The development of digitalization in the services dimension mainly has a strong industry crowding-out effect on the workers from economically developed regions, the workers engaged in non-productive service industries, and the workers with employment security.