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Impacts of digital-technology adoption on workers: A simple model and evidence from China

Author

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  • Jiang, Lihan
  • He, Yiyao
  • Jiang, Haiwei

Abstract

This paper examines the impact of point-of-sale (POS) adoption on training to investigate firms' requirements of employees. We construct a two-sector general model and find that the adoption of technology drives firms to increase training activities and decrease their labor-income share. Based on the data of 2451 firms from China's Small and Micro-sized Enterprises Survey in 2015 with an instrumental variable approach, we document that a one year increase in POS use increases the likelihood of firm training by 18.5–32.6%. In addition, the added training results from the demand for professional competence rather than simple needs for operating the POS system. Correspondingly, POS service intensifies the polarization of internal wages and worsens workers' welfare. The plausible underlying mechanisms for this are technology use, financial constraints, and operational efficiency.

Suggested Citation

  • Jiang, Lihan & He, Yiyao & Jiang, Haiwei, 2024. "Impacts of digital-technology adoption on workers: A simple model and evidence from China," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024006105
    DOI: 10.1016/j.iref.2024.103618
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    More about this item

    Keywords

    Digital technology; Training; Small business; Workers;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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