Industrial Digitalization and Wage Growth Premium in Large Cities:A Perspective on Scale Elasticity of Digital Factors
Embracing opportunities to foster deep integration of digital factors within industries and spearheading establishing a modern industrial system through industrial digitalization constitute key pillars to support cities in cultivating new developmental advantages.However,amid the acceleration of industrial digitalization,the issue of developmental disparity has become increasingly apparent.Larger cities are better positioned to advance the digitalization of their industries,an advantage that further transforms into a significant source of wage growth premiums.The phenomenon of wage growth based on urban size is intricately linked to the economic and social challenges facing China,profoundly affecting the trajectory of urbanization and the pace of social integration,and posing risks and pressures to the harmonious development of its urban system.Consequently,it is of great theoretical and practical importance to examine the impact and mechanisms of industrial digitalization on wage growth premiums in large cities amid the rapid progress of the digital economy,where the digital divide remains unbridled.Drawing from the complementary lens of digital factors and labor,previous research has delved into the implications of skill-biased technological advances on wage disparities among labor cohorts with diverse skill sets,yielding substantial explanatory power.However,focusing solely on the complementarity between digital factors and labor fails to elucidate the wage growth disparities among cities,as the neoclassical growth model posits that digital factors,akin to traditional production factors,lack scale elasticity.This will result in a lower investment intensity in digital factors within large cities with higher initial wages.This paper employs the non-homogeneous CES technology to describe the scale elasticity of digital factors,incorporating the clustering effect of industrial digitalization on skilled labor and its enabling impact on total factor productivity(TFP),thereby constructing a theoretical model that elucidates how industrial digitalization fosters wage growth premiums in large cities.Building upon this foundation,this paper defines the types and accounting scope of digital factors in conjunction with the Statistical Classification of Digital Economy and Its Core Industries(2021).It adopts the input-output analysis approach to quantify the level of industrial digitalization across Chinese cities from 2004 to 2018 to test the impact of industrial digitalization on wage growth premium in big cities and its mechanism.The results show that the positive scale elasticity of digital factors has enabled large cities to secure a leading edge in industrial digitalization,directly driving the wage growth premium.In addition,higher levels of industrial digitalization have indirectly contributed to the wage growth premium by causing high-skilled labor to cluster in large cities,while the effect of industrial digitalization on enhancing TFP is relatively weak.The extended analysis further reveals that the wage growth premium driven by industrial digitalization in large cities is mainly manifested through investments in digital software and digital platforms,with input from digital software having a more significant impact.However,stronger exclusivity constraints and industrial bias in integrating different digital factors limit the supportive role of digital hardware in advancing industrial digitalization in large cities.From the perspective of digital factors and industrial digitalization,this paper has new insights into the understanding of urban size-biased wage growth,and provides a complete theoretical analytical framework and robust empirical evidence.Against the backdrop of the thriving digital economy,the conclusions of this paper have important policy implications for promoting the deep integration of the digital economy and the real industry,as well as improving the urban wage growth potential and the coordinated development ability of the urban system in the digital economy era.
digital factorsindustrial digitalizationwage growth premiumcity size
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