Abstract:

Against the backdrop of the digital economy profoundly reshaping labor market landscapes and the increasingly salient problem of human resource misallocation, uncovering the intrinsic mechanism through which the digital economy drives an effective division of labor by skills is pivotal to achieving high-quality full employment. By constructing a “task transaction” team production model that incorporates the digital economy, this paper reveals a pathway in which the development of the digital economy reduces intra-team “task transaction” costs, thereby enabling an effective skill-based division of labor, leveraging workers’ comparative advantages, enhancing overall team productivity, and ultimately promoting wage growth. Taking the “Broadband China” policy as a quasi-natural experiment and using individual-level data from the China Family Panel Studies (CFPS), the empirical tests find that the digital economy significantly promotes a widespread increase in workers’ wages, and this effect is more pronounced for workers in non-routine occupations and those with higher cognitive skills. Further mechanism analysis employing data from listed companies demonstrates that the digital economy boosts team productivity by cutting task transaction costs, thereby driving wage growth. Extended analyses reveal that the digital economy also promotes firms’ demand for different types of occupations, especially non-routine skill-intensive occupations, representing another important pathway through which the digital economy increases wages.

Key words: digital economy, wage growth, division of occupational skills, task transaction costs, team production model