sustainability

Article
The Impact of Differentiated Development of the Digital
Economy on Employment Quality—An Empirical Analysis
Based on Provincial Data from China
Tongyang Liu 1 , Dong Xue 1, * , Yizhuo Fang 1 and Kunpeng Zhang 2

1 School of Economics, Henan University, Kaifeng 475001, China; [email protected] (T.L.)

2 School of Software, Henan University, Kaifeng 475001, China
* Correspondence: [email protected]

Abstract: In the context of the digital age, the digital economy, as a new economic model that the
Chinese government is currently committed to developing, has played a positive role in driving
consumption and creating employment opportunities. However, the differential development charac-
teristics of the digital economy are becoming increasingly evident. The level of digital infrastructure
and the application of digital facilities in China’s eastern regions are superior to those in the central
and western regions. The increasing level of differential development in the digital economy will
further accelerate the cross-regional mobility of labor. For the more developed eastern regions in
China, in terms of the digital economy, the ability to empower employment is relatively high, which
can create more job opportunities and attract a larger labor force seeking employment opportunities.
In contrast, the central and western regions face slower development in the digital economy and
relatively insufficient employment-empowering capacity, leading to labor force outflow. Proper cross-
regional labor mobility can enhance the efficiency of labor resource allocation. However, excessive
labor force mobility can lead to imbalanced labor resource allocation, causing job shortages and
reduced employment quality in regions with an excess of labor force, while labor loss regions face
labor shortages and talent drain, resulting in a loss of economic vitality in those regions. Therefore,
clarifying and addressing the various negative impacts brought about by the differential develop-
Citation: Liu, T.; Xue, D.; Fang, Y.;
Zhang, K. The Impact of
ment of the digital economy are crucial for improving the overall employment quality in the digital
Differentiated Development of the economy era. However, there is currently limited research focused on the influence of differential
Digital Economy on Employment development levels of the digital economy on employment quality. This study delves into the impact
Quality—An Empirical Analysis of the differential development levels of the digital economy on employment quality and analyzes
Based on Provincial Data from China. the underlying mechanisms. Based on panel data from 31 provinces and cities in mainland China
Sustainability 2023, 15, 14176. from 2011 to 2020, this study uses the entropy method to calculate both the employment quality
https://doi.org/10.3390/ index and the digital economy index. Building upon the digital economy index, the Gini coefficient
su151914176 of the digital economy development level in various regions in China is calculated using the Gini
Academic Editor: João J. Ferreira coefficient formula. Subsequently, a two-way fixed-effects model empirically analyzes the impact of
China’s differential development levels in the digital economy on employment quality. The research
Received: 31 August 2023
finds that the improvement in China’s differential development level in the digital economy signif-
Revised: 22 September 2023
icantly reduces employment quality. After re-calculating the Gini coefficient and the employment
Accepted: 23 September 2023
quality index using principal component analysis, it is found that the Gini coefficient of the digital
Published: 25 September 2023
economy still has a significantly negative impact on the employment quality index. After conducting
2SLS regression using instrumental variables, it is confirmed that there is still a significant negative
correlation between the Gini coefficient of the digital economy and the employment quality index.
Copyright: © 2023 by the authors. According to the regression results, for every 1% increase in the Gini coefficient of the digital economy,
Licensee MDPI, Basel, Switzerland. the employment quality index will decrease by 0.111% to 0.361%. Through a regression analysis of
This article is an open access article the mechanism of action, it is found that the industrial structure plays an intermediary role in the
distributed under the terms and
impact of the differential development levels of the digital economy on employment quality. The
conditions of the Creative Commons
improvement in the differential development levels of the digital economy is unfavorable for the
Attribution (CC BY) license (https://
transformation and upgrading of the industrial structure in the central and western regions, as well as
creativecommons.org/licenses/by/
the rational development of China’s overall industrial structure, thereby affecting the improvement
4.0/).

Sustainability 2023, 15, 14176. https://doi.org/10.3390/su151914176 https://www.mdpi.com/journal/sustainability

Sustainability 2023, 15, 14176 2 of 26

of employment quality. Based on the above empirical results, the following policy recommendations
are proposed: 1. The Chinese government should increase fiscal support for digital infrastructure
construction in the central and western regions, continuously narrowing the gap in digital economy
development levels between regions. 2. Regional governments in China should actively guide the
healthy upgrading of industrial structures based on the actual conditions of each region. 3. In the
digital economy era, the government should introduce relevant labor protection and social security
policies based on the characteristics of emerging professions to further improve the employment
quality of workers in the digital economy era.

Keywords: digital economy; digital differentiation; employment quality; industrial structure

1. Introduction
Employment, as the greatest livelihood project, has been highly valued by Chinese
governments. The fundamental solution to the employment problem lies in maintaining
steady economic growth. Economic growth serves as the driving force behind increasing
the employment scale and the number of job opportunities. Meanwhile, improving the
quality of employment requires continuous growth in workers’ incomes, optimization of the
working environment, and effective protection of workers’ legitimate rights and interests.
In October 2022, at the 20th National Congress of the Communist Party of China, it was
explicitly stated that China’s objective is to attain employment that is more abundant and
of higher quality. The implementation of an employment priority policy was emphasized,
highlighting the significance of both “quantity” and “quality” in the advancement of
employment, with the ultimate goal of achieving high-quality full employment.
In recent years, rapid advancements in digital technologies, such as artificial intelli-
gence, cloud computing, and big data, have propelled China’s economy and society into the
fast track of digital economic advancement. The incorporation of the digital economy into
the Chinese government’s work report initially transpired in 2017, and then the prevalence
of the digital economy has been steadily escalating. According to the “China Digital Econ-
omy Development White Paper (2021),” China’s digital economy surged to a magnitude of
CNY 45.5 trillion by 2021, constituting 38.8% of the GDP for that year. In stark contrast,
the extent of China’s digital economy stood at a mere CNY 2.6 trillion in 2015, signifying
14.2% of the total GDP during that period. Currently, the digital economy has emerged as a
pivotal impetus propelling high-quality progress within China’s economy. The “Insights
into the Current Situation and Trends of China’s Digital Economy Development”, released
by the China Academy of Information and Communications Technology, anticipates that by
2025, China’s total data volume is projected to encompass 30% of the global data volume,
positioning China as the nation boasting the most extensive array of data types and the
largest data volume. The amalgamation of digital technology with the real economy has
engendered novel employment modalities, with the digital economy progressively assum-
ing a momentous role in employment promotion, thereby constituting a vital impetus for
fostering high-quality employment.
The emergence of the digital economy has led to the creation of numerous new em-
ployment opportunities. Apart from a smaller proportion of positions related to digital
research and development, most employment opportunities in the digital economy are
characterized by flexible employment arrangements [1]. These flexible employment po-
sitions primarily rely on internet platforms, such as freelancers, platform food delivery
drivers, ride-sharing drivers, and so on. These flexible employment groups are often con-
sidered independent contractors rather than employees. The relationship between digital
platforms and these flexible workers tends to be more of a business partnership rather
than a traditional employment relationship. Compared to the protection of workers’ rights
under ordinary civil law, this business partnership provides limited labor protection for
flexible workers [2]. This means that they are not legally considered employees and they do
Sustainability 2023, 15, 14176 3 of 26

not enjoy the traditional labor protections afforded to full-time employees, such as limits
on working hours, overtime pay, paid leave, and workers’ compensation benefits [3]. This
makes them vulnerable to potential exploitation and unfair treatment. The lack of a fixed
employment relationship can result in a deterioration of labor rights [4], and most workers
in the digital economy, including freelancers, platform food delivery drivers, and ride-
sharing drivers, do not have labor protection contracts with the digital platforms they work
for. These platforms cannot be regarded as genuine employers. Therefore, the increase in
employment positions does not necessarily reflect a significant improvement in the welfare
levels of these groups of workers. In this study, the assessment of employment quality does
not solely rely on the quantity of employment positions but also takes into consideration
labor protection and employment environment factors. A comprehensive employment
quality index is constructed to assess the quality of employment. This approach aims to
provide a more holistic understanding of the well-being and job security of workers in
the digital economy, acknowledging that mere job quantity may not fully represent the
effective enhancement of their welfare.
However, the digital economy development level in various regions in China demon-
strates distinctive features. Innovation capacity and telecommunications services serve as
important indicators for measuring the level of digital economy development, and these
two indicators show significant variations across different regions in China. Taking the data
on patent applications in various regions as an example, according to the “China Statistical
Yearbook (2021),” [5] the top three provinces in terms of patent applications are Guangdong,
Jiangsu, and Zhejiang, with 967,204, 719,452, and 507,050 applications, respectively. In con-
trast, Qinghai, the province with the lowest ranking, has only 6736 applications, a difference
of approximately 143 times between the first and last place. In terms of telecommunications
services, the top three provinces are Guangdong, with CNY 1502.53 billion, followed by
Jiangsu with CNY 918.87 billion and Zhejiang with CNY 830.99 billion. The province with
the lowest ranking is Tibet, with CNY 42.909 billion, whereas Guangdong’s is 35 times that
of Tibet’s. The divergent growth of the digital economy poses challenges to the sustainable
and healthy development of the overall economy. Regional disparities in digital economic
advancement impede the integration and allocation of labor and capital resources, resulting
in imbalances and hampering the enhancement of employment quality. Therefore, the main
goal of this study is to empirically analyze the influence of differentiated development
of the digital economy on employment quality, and the secondary goal is to find out the
underlying mechanism between the differentiated development of the digital economy and
employment quality. Finally, based on the empirical results, we propose policy advice.

2. Literature Review, Theoretical Analysis, and Research Hypotheses

2.1. Literature Review
Tapscott initially introduced the concept of the digital economy, highlighting its differ-
entiation from the traditional economy. Tapscott emphasized that the digital economy is
characterized by the transmission of information through digital means [6]. Mesenburg
pointed out that the digital economy encompasses the establishment of e-commerce infras-
tructure and its associated commercial activities [7]. Guo and Liang [8] argue that internet
technology serves as the fundamental driving force behind the digital economy.
The development pattern of the digital economy differs significantly from the eco-
nomic laws under traditional industries, and there are significant differences in the path
of productivity enhancement [9]. Existing research has examined the optimization effects
of the digital economy on productivity. On the one hand, the impact of industrial digital-
ization has driven the transformation of traditional industries through the application of
digital technologies, aiming to increase production efficiency and output. The adoption
of digital technologies by businesses helps reduce operational costs [10], which is due to
the existence of spatial and temporal barriers to traditional employment methods. The
development of the digital economy has considerably expanded the temporal and spatial
boundaries of employment, facilitating the optimization of labor resource allocation [11].
Sustainability 2023, 15, 14176 4 of 26

On the other hand, it refers to the digital industries, which have a spatial spillover effect
driven by the development of information and communication technology (ICT) and the
internet industry [12]. Yang and Jiang [13] pointed out that this spillover effect plays a
substantial driving role in the high-quality economic development of surrounding regions.
Furthermore, the communication network infrastructure, which serves as the backbone
of the digital economy, offers a robust basis for the functioning of digital business models,
ultimately bolstering operational effectiveness for enterprises [14].
However, the presence of regional disparities in technological innovation talent ab-
sorption capacity, economic development levels, and digital economic policies has resulted
in imbalanced regional characteristics in China’s digital economy development. These
disparities can hinder the sustainable and robust growth of the digital economy. Li [15],
utilizing the Dagum Gini coefficient method, conducted a study on output efficiency, re-
gional disparities, and the dynamic evolution of the digital economy in different regions in
China. The findings indicated that regional disparities in the digital economy have been
widening over time. Jiao [16] examined the regional disparities of the digital economy
in eight comprehensive economic zones in China, revealing significant variations among
them. Han et al. [17], employing Kernel density estimation and the Dagum Gini coefficient,
evaluated the development of the digital economy in China’s three major regions. The
study concluded that the provincial-level development of the digital economy in China
demonstrates a fluctuating upward trend with non-equilibrium or differentiated growth.
In summary, the existing literature highlights substantial regional disparities in the level of
digital economy development in China, yet there is a relative scarcity of literature analyzing
the economic impacts brought about by this differentiated development level.
Employment quality is a multidimensional and comprehensive concept. Lai et al. [18]
constructed an employment quality evaluation system based on certain criteria, such as
worker compensation, social security, labor relations, employment conditions, and the work
environment. Zhu et al. [19] developed an employment quality evaluation system based on
employment capability, employment security, employment services, and employment level.
The existing literature has mainly examined the relationship between the digital econ-
omy and employment quality from a micro-level perspective, focusing on industries and
enterprises. Some studies have indicated that the application of intelligent technologies
generated by the digital economy may replace labor employment [20]. Others have pointed
out that the emergence and widespread use of new communication technologies, such
as computers and the internet, have weakened constraints on working hours and loca-
tions, potentially leading to longer working hours and decreased employment quality for
workers [21,22]. Furthermore, the development of the digital economy, while increasing
employment requirements, may also lead to structural unemployment, which could hinder
the improvement of employment quality [23,24]. However, some studies argue that the
advancement of the digital economy can improve productivity, alleviate labor intensity,
and foster emerging job opportunities, which are beneficial for enhancing employment
quality [25,26]. These two arguments have not yet reached a consensus in the existing
research.
The majority of research has approached the correlation between the digital economy
and employment quality from a micro-level viewpoint. Currently, there is no consensus as
to whether the digital economy has a positive or negative effect on employment quality.
Hence, it is crucial to comprehend the connection between the digital economy and employ-
ment at both the macro and micro levels, investigate its underlying mechanisms, and gain
a deeper insight into the intrinsic impact of the digital economy on employment quality.
Understanding this is pivotal for enhancing the digital economy to bolster employment
quality. The existing literature predominantly focuses on the association between the digital
economy and employment quality, with limited consideration given to the influence of
China’s diversified digital economy development on employment quality. Consequently,
the marginal contribution of this study lies in examining the influence of varied digital
economy development on employment quality from a macro perspective.
Sustainability 2023, 15, 14176 5 of 26

2.2. The Direct Effects of Differential Development Levels in the Digital Economy on
Employment Quality
2.2.1. Differentiated Characteristics of Digital Infrastructure
We aim to assess the varying degrees of digital economy development in different
regions in China by analyzing the distinctive characteristics of digital infrastructure and
the levels of digital applications.
Digital infrastructure plays a crucial role in the development of the digital economy,
and its key functions can be seen from the following perspectives. Firstly, digital infrastruc-
ture provides robust data storage and processing capabilities, supporting the data-driven
nature of the digital economy. The modern digital economy relies on technologies, such
as big data analytics, artificial intelligence, and machine learning, which require vast data
resources. Digital infrastructure serves as the backbone for these technologies. Secondly,
digital infrastructure facilitates cross-regional connectivity through the internet, promoting
the formation of interregional markets. Businesses can easily expand their operations
across regions using digital infrastructure, accelerating trade and cooperation between
regions. Additionally, digital infrastructure provides strong support for innovation and
entrepreneurship, giving rise to numerous startups and technological innovations. Tech-
nologies like cloud computing, open data, and APIs enable more convenient product and
service development. Furthermore, digital infrastructure helps improve the efficiency of
business operations and reduces operational costs, enhancing a company’s competitiveness.
It also creates conditions for the generation of employment opportunities. In summary,
digital infrastructure is an indispensable pillar of digital economy development, providing
a solid foundation for economic growth, innovation, and employment.
The differentiated development of digital infrastructure has the potential to exacerbate
disparities between regions, affecting the balanced growth of the digital economy. This
situation can result in a widening wealth gap [27], hindering the overall sustainable devel-
opment of the digital economy. In cases where there is an imbalance in digital economy
development, regions with existing capital advantages are more likely to adopt modern
intelligent production equipment at a faster rate, thus strengthening their capacity to attract
investments. Consequently, this further amplifies the disparities in production capital
proportions between regions with relatively weaker capital [28].
The length of fiber optic cables and the number of broadband internet access ports are
relevant indicators of digital infrastructure because they reflect two crucial aspects of digital
infrastructure: the coverage and capacity of communication networks, which are vital for
the development of the digital economy. Firstly, the indicator of fiber optic cable length is
of paramount importance because it signifies the availability of high-speed and stable data
transmission. Fiber optic communication is a high-bandwidth, low-latency transmission
method that, in comparison to traditional copper wires or wireless communication, can
support larger data transmission capacities. Consequently, the extent of fiber optic network
coverage directly impacts the performance of various data-intensive applications in the
digital economy, including online video streaming, cloud computing, big data analysis,
and remote work. Extensive coverage of fiber optic networks in a region can provide faster
and more reliable internet connections, thus facilitating the widespread adoption and use
of digital services. Secondly, the number of broadband internet access ports is another
critical indicator because it reflects the capacity and availability of digital infrastructure.
Broadband internet access ports refer to communication interfaces that allow individuals
and businesses to connect to the internet. With the continuous development of the digital
economy, an increasing number of devices and applications require fast and stable internet
connectivity. This necessitates a greater number of broadband internet access ports. Having
an adequate quantity of broadband internet access ports can meet users’ demands and sup-
port a wide range of online activities, including e-commerce, online education, telemedicine,
and the connectivity of smart home devices. Therefore, the quantity of broadband internet
access ports is a key metric that indicates whether a region’s digital infrastructure is suffi-
cient to support the development and innovation of the digital economy. In summary, the
Sustainability 2023, 15, 14176 6 of 26

length of fiber optic cables and the number of broadband internet access ports are pivotal
indicators of digital infrastructure. They are essential for the successful development of the
digital economy, ensuring efficient data transmission, enabling data-intensive applications,
and supporting a wide range of online activities. Improvements in these indicators can
enhance the competitiveness of the digital economy, foster economic growth, and create
employment opportunities.
Figures 1 and 2 illustrate the distribution of optical fiber length and the number of
broadband internet access ports from the 31 provinces (autonomous regions and municipal-
ities directly under the central government) in China. In 2020, as shown in Figure 1, Jiangsu
had a total optical fiber length of 3,990,069 km, Zhejiang had 3,497,879 km, and Sichuan had
3,535,457 km. On the other hand, the three regions with the lowest rankings were Tibet, with
only 201,862 km, followed by Ningxia with 269,378 km, and, slightly higher, was Qinghai
with 375,296 km. In terms of internet access port numbers by 2020, in Figure 2, Guangdong
had the highest with 86.5323 million ports, followed by Jiangsu with 72.2486 million ports,
and, finally, Shandong with 67.5676 million ports, ranking in the top three. Conversely,
Tibet had only 2.1898 million ports, and Qinghai had 4.1282 million ports. The unequal
development of digital infrastructure between regions will have a negative impact on the
overall employment quality. Uneven development of digital infrastructure will put workers
in underdeveloped regions at risk of unemployment and inadequate employment opportu-
nities. This is because the digital economy increasingly relies on high-speed internet and
digital technologies. In regions with relatively weak digital infrastructure, people have
fewer opportunities to access remote work, online learning, and digital entrepreneurship.
This exacerbates the digital divide, limiting the participation of businesses and individuals
in the digital economy in areas with relatively weak digital infrastructure. Furthermore,
digital skills have become crucial in the digital economy, and regions with insufficient
digital infrastructure development will lack opportunities to provide digital skills training
and education for workers, leading to a skills gap. Moreover, individual entrepreneurship
and business development in regions with relatively weak digital infrastructure will be
constrained. Areas lacking digital hardware support struggle to attract digital companies
and achieve the digital transformation of traditional companies, which hinders local job
growth and employment quality improvement. This situation can result in an influx of la-
bor into areas with advanced digital infrastructure, leading to job shortages in those regions.
In contrast, underdeveloped areas with weak digital infrastructure struggle to drive the
digital transformation of their economies, making it difficult to improve the employment
environment and wage levels for local workers. Therefore, the differential development of
digital infrastructure will overall hinder the improvement of employment quality. It creates
disparities in job opportunities, digital skills acquisition, and economic growth potential
between regions, which, in turn, affect the quality of employment available to individuals
in those areas.

2.2.2. Differentiated Development of Digital Applications

The potential positive mechanism of the digital economy and employment quality is
shown in Figure 3. As the digital economy continues to evolve, it has created new market
demands and further spawned new types of occupations. Examples of these emerging
employment groups include platform food delivery drivers, ride-sharing drivers, and
online service providers. These emerging employment groups have distinct characteristics
in the digital realm, reflecting the profound impact of the digital economy and techno-
logical developments on work patterns and the job market. Firstly, digital tools provide
these emerging employment groups with greater flexibility. They can work anytime and
anywhere through mobile applications, and they are no longer confined to traditional
offices or work locations. This digital flexibility allows them to better balance work and
life, adapting to different schedules and demands. Additionally, digital platforms offer
these employment groups more extensive market opportunities. Digital platforms connect
Sustainability 2023, 15, 14176 7 of 26

Sustainability
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15, 14176 77 of
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14176 suppliers and demanders, enabling them to provide and access services over a broader 27
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Sustainability 2023, 15, 14176 8 of 26
Sustainability 2023, 15, 14176 8 of 27

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Figure 3. Mechanisms of the impact of the development of the digital economy on employment.
Figure 3. Mechanisms of the impact of the development of the digital economy on employment.

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has its level of businesses
provided development varies
with acrossmarkets
broader differentandregions.
more
Some major cities and coastal areas have rapidly adopted and promoted
efficient operational methods, thereby powerfully driving the growth of China’s digital e-commerce, while
other
economy.regions may face challenges,
Simultaneously, such as government
the Chinese insufficient digital infrastructure,
has actively supported limited
themarket
devel-
access, and talent drain. This has resulted in significant disparities
opment of the digital economy, further unleashing the market potential of this sector in the development
of e-commerce
through policy across
guidance. China. Firstly,the
Secondly, first-tier
ascentcities and eastern
of e-commerce hascoastal
had a regions
profound in impact
China
are typically e-commerce hotspots, benefiting from stronger
on the quality of employment in China. E-commerce platforms have created new em- digital infrastructure, higher
internet penetration rates, and more market opportunities. In these areas, e-commerce plat-
ployment opportunities, including for platform food delivery drivers, warehousing and
forms thrive, attracting significant investments and corporate participation, thus driving
logistics workers, and e-commerce platform operators, among others. These emerging
the growth of the digital economy. Secondly, relatively less-developed inland regions may
forms of employment typically offer flexibility, allowing individuals to choose their
encounter challenges related to inadequate digital infrastructure, limiting the development
work hours according to their schedules. However, they also come with a degree of in-
of e-commerce. The lack of high-speed internet connectivity and support for digital tech-
stability and issues related to social security. Therefore, e-commerce is of utmost im-
nologies makes it difficult for residents in some regions to fully access the opportunities
portance for China’s job market, requiring a balance between increasing job opportuni-
offered by the digital economy, exacerbating the digital divide. Due to the uneven develop-
ties and improving employment quality. However, as e-commerce has rapidly devel-
ment characteristics of e-commerce, it has implications for employment quality in different
oped in China, its level of development varies across different regions. Some major cities
regions. E-commerce creates a substantial number of job opportunities in first-tier cities and
and coastal areas have rapidly adopted and promoted e-commerce, while other regions
coastal regions but may offer fewer opportunities in China’s central and western regions.
may face challenges, such as insufficient digital infrastructure, limited market access,
In this context, this section will delve into the phenomenon of the uneven development
and talent drain. This has resulted in significant disparities in the development of
 the development of e-commerce. The lack of high-speed internet connectivity and sup-
port for digital technologies makes it difficult for residents in some regions to fully ac-
cess the opportunities offered by the digital economy, exacerbating the digital divide.
Due to the uneven development characteristics of e-commerce, it has implications for
employment quality in different regions. E-commerce creates a substantial number of job
Sustainability 2023, 15, 14176 9 of 26
opportunities in first-tier cities and coastal regions but may offer fewer opportunities in
China’s central and western regions. In this context, this section will delve into the phe-
nomenon of the uneven development of e-commerce across various regions in China,
of e-commerce
analyze across
its impact on various regions
the digital in China,
economy analyze its impact
and employment on and
quality, the digital
exploreeconomy
ways to
and employment
address quality,
this imbalance to and
ensureexplore ways
that the to address this
opportunities imbalance
of the to ensureare
digital economy that the
more
opportunities of the digital
broadly distributed economy
nationwide, are more broadly
promoting fair anddistributed
sustainablenationwide,
employment promoting
quality
fair and sustainable employment quality growth.
growth.
Using the
the e-commerce
e-commerceindustry
industryininvarious
variousregions
regionsininChina
Chinaasasananillustration,
illustration,Figure
Figure 4
presents the percentage of enterprises engaged in e-commerce for the
4 presents the percentage of enterprises engaged in e-commerce for the total number oftotal number of
enterprises
enterprises inin 2020,
2020, and
and these
these data
data represent
represent the
the proportion
proportion ofof e-commerce
e-commerce enterprises
enterprises to to
the
the total
total enterprises.
enterprises.

25

20

15
%

10

Figure 4. The proportion of e-commerce enterprises to the total enterprises

enterprises in
in each
each region
region by
by 2020.
2020.
source: China Statistical Yearbook (2021)) [5].
(Data source: [5].

In
In 2020,
2020, the
the percentage
percentageof ofenterprises
enterprisesengaged
engagedinine-commerce
e-commerce trading
tradingactivities varied
activities var-
across different
ied across differentregions in China.
regions in China.Heilongjiang
Heilongjiang accounted
accounted forfor
5.5% ofof
5.5% total enterprises,
total enterpris-
Liaoning
es, Liaoningaccounted for 5.8%,
accounted Xinjiang
for 5.8%, accounted
Xinjiang accountedfor 6.2%, and Henan
for 6.2%, accounted
and Henan for 7.5%.
accounted for
In contrast, Chongqing accounted for 13.7% and Zhejiang accounted
7.5%. In contrast, Chongqing accounted for 13.7% and Zhejiang accounted for 12.2%. The for 12.2%. The per-
centage
percentage levellevel
of participation in e-commerce
of participation in e-commerceand the andquality of employment
the quality are closely
of employment are
related in China. The uneven development of e-commerce across different
closely related in China. The uneven development of e-commerce across different regions regions and
industries has resulted
and industries in varying
has resulted degrees
in varying of e-commerce
degrees participation,
of e-commerce thereby influencing
participation, thereby in-
the
fluencing the diversity of employment conditions. Regions with e-commerce
diversity of employment conditions. Regions with high levels of high levelspar- of
ticipation typically create more job opportunities, particularly in certain
e-commerce participation typically create more job opportunities, particularly in certain areas, such as
e-commerce
areas, such as platform operations,
e-commerce platform logistics, digitallogistics,
operations, marketing, andmarketing,
digital customer support. These
and customer
fields of work often require digital skills and online sales experience. Therefore,
support. These fields of work often require digital skills and online sales experience. individuals
employed in more developed e-commerce regions are more likely to secure jobs related to
the digital economy and enjoy relatively higher average salary levels.
Firstly, regions with advanced digital economies typically have more sophisticated
digital infrastructure, attracting the presence and investments of businesses related to the
digital economy. This provides these regions with more job opportunities. Secondly, these
advanced digital economy regions have a greater demand for advanced digital skills and
specialized knowledge, requiring workers to undergo higher-level digital skills training.
The availability of educational resources and labor mobility makes digitally developed
regions more attractive. However, this attractiveness can also pose risks of over-competition
and “burnout” among job seekers, as the labor supply may exceed the actual demand for
positions. Job seekers may resort to long working hours or even accept lower wages to gain
a competitive edge, ultimately lowering employment quality. In contrast, less-developed
regions in the digital economy may receive less attention from digital-centric businesses,
leading to fewer job opportunities related to the digital economy. These regions may also
Sustainability 2023, 15, 14176 10 of 26

have limited capacity to absorb labor. Additionally, wage levels in these regions tend to
be lower than in digitally developed areas. Less-developed digital economy regions often
engage in low-end industries within the digital economy, such as e-commerce warehousing
and logistics, while high-end industries, like software and hardware development and
financial promotion, are concentrated in digitally developed regions. If the disparities in
digital economic development levels between regions continue to widen, the disparities
in employment levels will become more pronounced. Mismatches in labor resources
between regions will lead to a decrease in employment quality. The employment situation
in digitally developed regions will become increasingly challenging, while the employment
levels in digitally less developed regions will remain stagnant, ultimately hindering the
overall improvement of employment quality in China.
Based on the above theoretical analysis, this paper proposes the following hypothesis.

Hypothesis 1. The higher the level of differentiated development of the digital economy, the more
detrimental it is to the improvement of employment quality.

2.3. The Indirect Effects of Differential Development Levels in the Digital Economy on
Employment Quality
Digital Economy, Industrial Structure, and Employment Quality
Existing research has confirmed that advancements in internet technology optimize the
employment structure, and the widespread application of digital technology creates new job
opportunities in the tertiary sector [29]; it has partially substituted employment positions in
labor-intensive and medium-to-low technology-intensive industries [30]. Meanwhile, the
digital transformation of traditional enterprises can significantly improve productivity [31].
Hu et al. [32] have found that the advancement of digital technology is associated with
consistent growth in employment, contributing positively to the restructuring of industries
and the creation of job opportunities. Guo [33] has pointed out that the increasing adoption
of artificial intelligence is expected to drive the expansion of digital finance, consequently
influencing the structure of industries. Wang [34] showed that the industrial intelligence
in China expands the absorptive capacity of the service sector for employment, thus
contributing to the improvement of employment quality. Ye et al. [35] conducted an
empirical analysis using panel data at the provincial level in China during 2001–2017. Their
study examined the impact of digital economic development on employment structure,
considering various aspects, such as industry, sector, and skills. Their findings suggest
that the digital economy has played a significant role in reshaping China’s employment
structure, leading to a shift towards a manufacturing-oriented, high-tech, and high-skilled
direction.
The convergence of digital technology and traditional industries has revolutionized
information transfer and knowledge acquisition, effectively reducing production costs for
enterprises and achieving more efficient resource allocation. It has also enabled economies
of scale and precise resource allocation, thus driving the transformation and upgrading of
industrial structures [36]. However, the differentiated development of the digital economy
leads to variations in the integration between digital technology and the real economy
in terms of speed, quality, and extent across different regions [37]. This disparity creates
imbalances in supply and demand, information transmission, and knowledge acquisition.
Consequently, there is a misalignment of labor resources, which impedes the enhancement
of employment quality. Moreover, the differential development of the digital economy
hinders the balanced development of emerging industries across regions, obstructing the
overall progression of the industrial structure towards the mid-to-high end [38].
Therefore, the differentiated development of the digital economy poses a constraint on
the transformation and upgrading of the overall industrial structure. The industrial struc-
ture and employment structure are two complementary systems, where the advancement
of the industrial structure drives improvements in the employment structure. However,
the speed of upgrading the employment structure often lags behind that of the industrial
Sustainability 2023, 15, 14176 11 of 26

structure. According to Zong et al. [39], the upgrading of the industrial structure gener-
ates numerous emerging job positions. This upgrading process has a positive impact on
employment quality, but the differential development of the digital economy hampers
the transformation and upgrading of the industrial structure, thus adversely affecting
employment quality. As the digital economy advances, workers in the primary sector
gradually transition away from agricultural work and move into manufacturing, services,
and other related industries. Simultaneously, the upgrading and transformation of the
secondary industry through digital technology will improve the production efficiency of
this sector, promote new social divisions of labor, and, consequently, increase the demand
for emerging service industries. As a result, the tertiary industry will continue to develop.
Therefore, sustained progress in the digital economy facilitates the gradual shift of labor
from the primary industry to the secondary and tertiary industries, ultimately leading to
an improvement in employment quality through the upgrading of the industrial structure.
If the digital economy develops in a balanced manner across different regions in China, it
will drive the overall industrial structure towards higher levels.
However, the differential development of the digital economy has significant dispari-
ties in the adjustment speed of the industrial structure among regions, thereby impeding
the transformation and upgrading of the overall industrial structure [40]. Furthermore,
it distorts the rationalization level of the industrial structure within each region. This
ultimately hinders the enhancement of employment quality and inhibits the healthy devel-
opment of the industrial structure [41,42]. Skilled labor in regions with relatively backward
industrial structures and relatively lower levels of digital economy may migrate to re-
gions with relatively better industrial structures and higher levels of digital economy. This
migration pattern results in regions with better industrial structures attracting a greater
number of high-skilled and low-skilled workers. However, the excessive concentration of
talent can lead to a mismatch in labor resources. The over-concentration of labor in regions
with developed industrial structures and digital economies may transform the healthy
labor market competition into a state of involution, ultimately undermining the overall
improvement of employment quality.
Based on the theoretical analysis presented above, this paper proposes the following
hypothesis.

Hypothesis 2. The differentiated development of the digital economy affects the quality of employ-
ment by influencing the industrial structure of each region.

3. Model and Data

3.1. Evaluation System Construction and Measurement of the Digital Economy
The digital economy, as a burgeoning economic form, encompasses industrial dig-
itization, digital industries, and data valorization with internet information technology
as a carrier, which is an emerging economic form that promotes resource reorganization
of traditional factors to achieve optimal resource allocation and regeneration [43]. The
development of ICT is crucial for the realization of the digital economy [44]; thus, the
development of digital infrastructure in various regions in China should be included as
a measuring indicator. The extensive adoption of digital technology enables the digital
economy to permeate various facets of societal existence, while traditional industries are
also integrating with the advancements of the digital economy. Simultaneously, the digital
economy undergoes constant evolution through its practical implementation. Therefore,
the extent to which digital technology is widely adopted should be integrated into the
evaluation system for the digital economy. Additionally, the research and innovation
capacities are crucial for fostering the rapid advancement of the digital economy, and eval-
uating these capabilities is of utmost importance. Therefore, this study assesses the level of
digital economy development in different regions by considering digital infrastructure, the
widespread application of the digital economy, and innovation capabilities. The evaluation
system and indicators are shown in Table 1.
Sustainability 2023, 15, 14176 12 of 26

Table 1. Digital economy development indicators evaluation system.

Primary Indicators Secondary Indicators Tertiary Indicators

Length of fiber optic/Area of
Fiber optic density
administrative regions

Digital infrastructure Number of internet broadband access

Internet coverage density
ports/Permanent resident population
Mobile phone penetration rate Mobile phone penetration rate
Number of internet domain names Number of internet domain names

The evaluation Telecommunication service volume Total telecommunication service

system of digital per capita volume/Permanent resident population
The widespread
economy indicators application of digital Depth of digital financial usage Depth of digital financial usage
in various regions in technology Breadth of digital financial coverage Breadth of digital financial coverage
China
Digital finance digitization degree Digital finance digitization degree
Research and development expenditure
Intensity of research and of industrial enterprises above
development investment designated size/Permanent resident
Innovation capability population
Number of patent
Innovation activity applications/Permanent resident
population

Based on the above indicators, this study uses the entropy method to calculate the
weight of each indicator and subsequently generate the digital economy index for various
regions in China. The advantage of using the entropy method lies in the fact that it does not
require assigning subjective weights to each indicator. In situations where the exact weights
for each indicator are not known, the results of the entropy method are more objective. The
specific calculation steps are as follows:
Firstly, the indicators are subjected to a standardization process. Because all the
indicators in Table 1 are positive indicators, the standardization formula used is as shown
in Equation (1): 
1
xij − min xij
xij =   (1)
max xij − min xij
where xij in Equation (1) is the “j” indicator of each region “i” in Table 1; j = 1, 2, 3······10.
The second step is to calculate the weights accounted for by each indicator in each
region, and it represents the weight proportion of each indicator to the total indicators. The
calculation formula is shown in Equation (2):

xij1
Pij = (2)
∑30 1
i =1 xij

The third step is to find the information entropy based on the calculation result of the
second step, which is calculated as shown in Equation (3):

31
1
∑ Pij ∗ ln


ej = − Pij (3)
ln(n) i =1

In the fourth step, the coefficient of variation of each index is calculated according to
Equation (3), and the calculation formula is shown in Equation (4):

dj = 1 − ej (4)
Sustainability 2023, 15, 14176 13 of 26

The fifth step is to normalize the coefficient of variation by calculating the weight
proportion of each indicator’s coefficient of variation, as shown in Equation (5):

dj
wj = 10
(5)
∑ j =1 dj

In the sixth step, the comprehensive index of the digital economy in each region is
calculated based on the weights, as shown in Equation (6):

10
Digitali = ∑ w j ∗ xij1 (6)
j =1

Based on the data of various indicators in Table 1 and the calculation process using
the entropy method mentioned above, this study has computed the digital economy index
for different regions in China and presented the spatiotemporal distribution in Figure 5.
According to Figure 5, the digital economy index of each region in China has a significant
increasing trend from 2011 to 2020. The average index value for all regions in 2011 was
0.085, while it increased to 0.194 in 2015 and further to 0.371 in 2020. From 2011 to 2020,
China’s digital economy index increased by an average of 0.029 annually. Specifically, in
the eastern region, the digital economy index grew from 0.151 in 2011 to 0.475 in 2020,
with an average annual increase of 0.032. In the central and western regions, the digital
economy index increased from 0.043 in 2011 to 0.273 in 2020, with an average annual
increase of 0.023. Overall, the digital economy index in various regions in China has been
steadily rising, but there are significant differences among regions. The eastern region
has a relatively higher average and growth speed of the digital economy index, while the
central and western regions have relative lower averages and growth speeds compared
to the overall average, indicating a trend of increasing disparity in the development of
the digital economy. In terms of regional distribution, significant variations exist in the
progress of the digital economy throughout China. Some regions, such as Beijing, Tianjin,
Shanghai, Zhejiang, and Guangdong, have consistently held a leading position in digital
economy advancement, while other areas have been striving to catch up. This indicates a
Sustainability 2023, 15, 14176 significant disparity in the development of the digital economy across regions,14highlighting
of 27
the presence of differentiated growth.

Figure 5. Spatial–temporal distribution of the digital economy index in various regions in China.
Figure 5. Spatial–temporal distribution of the digital economy index in various regions in China.
To measure the degree of digital economy differentiation among various regions in
China, the Gini coefficient is calculated based on the results of the digital economy index,
and the Gini coefficient calculation formula is shown in Equation (7). The range of the
calculated results is from 0 to 1, where a value closer to 1 indicates a higher level of im-
balance, and vice versa.
Sustainability 2023, 15, 14176 14 of 26

To measure the degree of digital economy differentiation among various regions

in China, the Gini coefficient is calculated based on the results of the digital economy
index, and the Gini coefficient calculation formula is shown in Equation (7). The range of
the calculated results is from 0 to 1, where a value closer to 1 indicates a higher level of
imbalance, and vice versa.
n n Digital j − Digitali
1
Gini =
2Digital
∑∑ n ( n − 1)
(7)
i =1 j =1

3.2. Construction and Measurement of Employment Quality Evaluation System

This paper constructs an evaluation system for employment quality based on the
concept of decent labor. According to the existing research, the evaluation system of
employment quality of 31 provinces in China is constructed from three dimensions of labor
remuneration, labor protection, and employment conditions. Nine specific indicators are
used in the evaluation system. Labor remuneration reflects the total remuneration received
by workers for their participation in productive activities, which embodies the social
value created by labor [45]. It is measured by five secondary indicators: average wages
of urban employed persons, the proportion of total wages to GDP, accumulated surplus
of unemployment insurance fund (in CNY 100 million), accumulated surplus of urban
and rural residents’ social pension insurance fund (in CNY 100 million), and accumulated
surplus of work injury insurance fund (in CNY 100 million). The primary indicators of
labor protection reflect the specific conditions of workers in terms of seeking fair treatment,
and they are measured by three secondary indicators: labor dispute settlement rate, number
of fund trade unions, and success rate of union mediation. Employment conditions are
measured by the urban registered unemployment rate. The secondary indicators in Table 2
are derived from the original data of the “China Statistical Yearbook (2012–2021)” [5] and
do not involve any calculations; hence, Table 2 does not include tertiary indicators. The
specific evaluation system for employment quality is presented in Table 2.

Table 2. Evaluation system of employment quality by region in China.

Primary Indicators Secondary Indicators

Average wage of urban employed person
Proportion of total wages to GDP
Accumulated surplus of unemployment insurance fund (in CNY 100 million)
Labor remuneration
Accumulated surplus of urban and rural residents’ social pension insurance
fund (in CNY 100 million)
Evaluation system of Accumulated surplus of work injury insurance fund (in CNY 100 million)
employment quality
Labor dispute settlement rate
Labor protection Number of fund trade unions
Success rate of union mediation
Employment
Urban registered unemployment rate
conditions

In this study, the quality of employment is assessed using the entropy value method,
and the results are shown in Figure 6.
Figure 6 illustrates significant variations and unstable temporal changes in employ-
ment quality across various regions in China. Except for the southeastern coastal areas,
most regions exhibit a fluctuating trend in employment quality. Non-coastal regions have
been unable to sustain continuous growth in employment quality, and some areas even
experienced a decline in employment quality in 2020 compared to 2015.
 Success rate of union mediation
Employment condi-
Urban registered unemployment rate
tions

Sustainability 2023, 15, 14176 15 of 26

In this study, the quality of employment is assessed using the entropy value method,
and the results are shown in Figure 6.

Figure 6. Spatial–temporal distribution of employment quality in various regions in China.

Figure 6. Spatial–temporal distribution of employment quality in various regions in China.

3.3. Figure
Variable6Selection
illustrates
and significant variations
Descriptive Statistics andData
of the unstable temporal changes in em-
ployment quality across
3.3.1. Dependent Variable various regions in China. Except for the southeastern coastal
areas, most regions exhibit a fluctuating trend in employment quality. Non-coastal re-
The dependent variable in this study is employment quality, which is a comprehensive
gions have been unable to sustain continuous growth in employment quality, and some
indicator. Based on the employment quality evaluation system constructed earlier, the
areas even experienced a decline in employment quality in 2020 compared to 2015.
employment quality score is calculated using the entropy method, ranging from 0 to 1.
Employment quality is positively correlated with its values.
3.3. Variable Selection and Descriptive Statistics of the Data
3.3.2.Dependent
3.3.1. Independent Variable
Variable
Thedependent
The core independent
variablevariable is the level
in this study of differentiated
is employment development
quality, in the digital
which is a comprehen-
economy. It is also based on the digital economy development
sive indicator. Based on the employment quality evaluation system constructedevaluation system con-
earlier,
structed
the earlier. The
employment levelscore
quality of differentiated
is calculateddevelopment in the digital
using the entropy method,economy
rangingis from
calculated
0 to
1.using the entropy
Employment method.
quality Subsequently,
is positively correlatedthewith
levelits
ofvalues.
differentiated development in the
digital economy for each region in China is calculated using Equation (7). The range of the
core independent variable is 0 to 1. A value closer to 1 indicates a greater imbalance in digi-
tal economy development among regions and a higher level of differentiated development,
or vice versa.

3.3.3. Control Variables

The following control variables are selected in this paper: regional GDP per capita
(lnpgdp), human capital level in each region (lnhc), number of foreign-invested enterprises
(ln f ie), road infrastructure (lnrin f ), urbanization level (Urban), technological progress level
(Tech), policy regime (Policy), and labor force structure (Labrstr).
The regional GDP per capita (lnpgdp) is adjusted using the GDP deflator with the base
year of 2011 and then transformed into a logarithmic value. The human capital level in each
region (lnhc) is expressed by the logarithm of the number of students enrolled in higher
education per hundred thousand people. The number of foreign-invested enterprises
(ln f ie) is expressed as the logarithm of the number of foreign-invested enterprises in each
region. Road infrastructure (lnrin f ) is the logarithmic value of road area in each region.
Urbanization level (Urban) is the proportion of registered urban population to the total
population in each region. Technological progress level ((Tech) is the ratio of the number
of granted patents to the number of patent applications in each region. The policy regime
(Policy) is expressed by the proportion of fiscal expenditure to GDP in each region. Labor
Sustainability 2023, 15, 14176 16 of 26

force structure (Labrstr) is calculated as the ratio of the proportion of high-skilled labor
to the combined proportion of low-skilled and medium-skilled labor (high-skilled labor:
education level of bachelor’s degree or above; medium-skilled labor: education level of
high school or college; low-skilled labor: education level below high school).

3.3.4. Mechanism Variables

Based on the previous theoretical analysis, the authors contend that the differentiated
advancement of the digital economy has repercussions for employment quality by influ-
encing the structure of industries. In this study, the Theil index is employed to gauge the
rationalization level of the industrial structure [46], while the transformation and upgrad-
ing level of the industrial structure are utilized as additional mechanism variables. The
calculation formula for the rationalization level of the industrial structure in each region is
as follows: yi !
3  
yi
indr = ∑
l
ln yi (8)
i =1
y l

In Equation (8), yi represents the output value of the i (primary; secondary; tertiary)
industry in each region, and li represents the number of employees in the i (primary; sec-
ondary; tertiary) industry of each region. The variables y and l represent the total economic
output and total employees across industries in each region, respectively. The calculation
method of this index reflects whether the allocation of labor resources is reasonable. When
the per capita GDP of the i (primary; secondary; tertiary) industry is higher than the overall
per capita GDP, the proportion of employees in the i (primary; secondary; tertiary) industry
should be higher. Therefore, this value is a positive indicator. An increase in this index can
be considered an indication that the overall industrial structure is moving towards a more
rational level. Conversely, if this index decreases, it suggests the opposite.
To determine the transformation and upgrading level of the industrial structure,
weights are assigned to the primary, secondary, and tertiary industries, followed by cal-
culating their weighted average [47]. The formula is shown as Equation (9), where xi
represents the proportion of the i (primary; secondary; tertiary) industry’s output to the
GDP. This index assigns the highest weight proportion to the tertiary industry. An increase
in this index reflects the development of the industrial structure towards a more advanced
level, indicating a continuous upgrading of the industrial structure. Conversely, if this
index decreases, it suggests the opposite. The definitions, data sources, and descriptive
statistics of each variable are shown in Tables 3 and 4.
3
indt = ∑ xi × i (9)
i =1
Table 3. Variable definition and data source.

Category Variable Symbol Definition Source UoM

The employment quality in China Statistical
various regions in China from Yearbook; China
Dependent
Employment quality Empqlty 2011 to 2020 was calculated Population and
variable
according to the evaluation Employment Statistical
index system in Table 2. Yearbook
The Gini coefficient of the
digital economy in each
China Statistical
region in China from 2011 to
Yearbook; Yearbook of
2020 was calculated according
Independent Digital Economy China Communications;
Gini to the evaluation system in
variable Differentiation Index Institute of Digital
Table 1 and the entropy
Finance Peking
method. Subsequently, it was
University (IDF)
recalculated according to
Equation (7).
Sustainability 2023, 15, 14176 17 of 26

Table 3. Cont.

Category Variable Symbol Definition Source UoM

The logarithmic value of GDP
The regional GDP per
lnpgdp (in CNY) per capita in each
capita
region in China.
The logarithm of the number
of students enrolled in higher
Level of human capital lnhc education per hundred
thousand people in each
region in China.
The number of The logarithm of the number
foreign-invested ln f ie of foreign-invested
enterprises enterprises in each region.
The logarithmic value of road China Statistical
Road infrastructure lnrin f
area in each region in China. Yearbook [5]
The proportion of registered
urban population to the total
Urbanization level Urban %
population in each region in
China.
Control
variables The ratio of the number of
Technological progress granted patents to the number
Tech
level of patent applications in each
region in China.
The proportion of fiscal
Policy regime Policy expenditure to the total GDP
in each region in China.
The ratio of the proportion of
high-skilled labor to the
combined proportion of
low-skilled and
medium-skilled labor.
(High-skilled labor: education China Labour Statistical
Labor force structure Labrstr
level of bachelor’s degree or Yearbook
above; medium-skilled labor:
education level of high school
or college; low-skilled labor:
education level below high
school).
The rationalization level of
The rationalization the industrial structure in
level of the industrial indr each region in China was
structure calculated based on Equation
Mechanism (8). China Statistical
variables Yearbook [5]
The transformation and
The transformation upgrading level of the
and upgrading level of indt industrial structure in each
the industrial structure region in China was
calculated using Formula (9).
Sustainability 2023, 15, 14176 18 of 26

Table 4. Descriptive statistics of variables.

Category Symbol N Mean Std. Dev. Min Max

Dependent variable Empqlty 310 0.328 0.085 0.119 0.665
Independent variable Gini 310 0.008 0.005 0.003 0.038
lnpgdp 310 10.780 0.448 9.691 12.013
lnhc 310 7.823 0.292 6.987 8.633
ln f ie 310 8.813 1.407 5.338 12.097
lnrin f 310 9.741 0.922 6.489 11.535
Control variables
Urban 310 0.574 0.134 0.222 0.942
Tech 310 0.554 0.102 0.251 0.835
Policy 310 0.284 0.210 0.023 1.379
Labrstr 310 0.110 0.110 0.027 0.778
indr 310 0.204 0.127 0.012 0.598
Mechanism variables
indt 310 2.379 0.127 2.166 2.836

According to Table 4, the differentiation index of the digital economy ranges from
0.003 (minimum value) to 0.038 (maximum value). There is a significant difference between
the above values, indicating that the digital economy varies widely among different regions.
The average employment quality value is 0.328, and it ranges from a minimum of
0.119 to a maximum of 0.665. This reveals a certain disparity in employment quality
among regions.

3.4. Empirical Model Setting

The baseline regression model for this paper is set as follows:
8
lnEmpqltyit = α0 + β 1 lnGiniit + ∑k=1 β k Xit + µi + λt + ε it (10)

In Equation (10), i and t represent the province and the year, respectively. lnEmpqltyit
represents the logarithm value of the employment quality index for i region in t year.
lnGiniit represents the level of differentiation in the digital economy for i region in t year,
which is the logarithm value of the calculated result from Equation (7), while lnGiniit is
the core independent variable in this paper. β 1 reflects the marginal impact of the core
independent variable on employment quality. Xit represents a series of control variables,
whereas β k denotes the estimated coefficients of each control variable. µi represents the
unobservable province individual fixed effects for the i province, λt represents the time
effects, ε it represents the random disturbance term, and α0 represents the intercept term of
the model.

4. Empirical Results
4.1. Baseline Regression Results
In order to further determine whether the model set in this paper should use fixed
effects, the Hausman test should be conducted first, as shown in Table 5. For the Hausman
test results of Equation (10), the test results show that the Hausman value is 26.940, and the
corresponding p-value is 0.0007, which means that the random effect can be rejected from
the 1% confidence level, and this paper chooses that it is reasonable to use the fixed effect
model after the test.
Sustainability 2023, 15, 14176 19 of 26

Table 5. Hausman test.

Variables FE RE
−0.154 *** −0.167 ***
lnGini
(0.042) (0.029)
0.161 0.078
lnpgdp
(0.130) (0.076)
0.961 *** 0.403 ***
Urban
(0.164) (0.111)
−0.182 * −0.235 ***
lnhc
(0.099) (0.076)
−0.071 0.043
ln f ie
(0.051) (0.028)
0.011 0.210 ***
lnrin f
(0.066) (0.036)
0.277 0.478 ***
Policy
(0.233) (0.123)
−0.592 * 0.149
Labrstr
(0.311) (0.198)
−0.340 −2.324 ***
cons
(1.265) (0.899)
Hausman 26.940 ***
p − value 0.0007
Note: *** and * represent 1% and 10% levels of statistical significance, respectively; standard errors are in
parentheses.

As shown in Table 6, (8) reports the results of model estimation of Equation (10), where
(1) is a univariate regression without the inclusion of control variables, and (2) to (7) are re-
gression results with the stepwise inclusion of control variables based on (1). Table 6 shows
that the estimated coefficient between the level of differentiation in the digital economy and
employment quality is significantly negative. The results support hypothesis one, which
suggests that the differentiated advancement of the digital economy has a negative effect
on employment quality. The negative impact on employment quality can be attributed
to the disparities in the level of digital economic advancement among regions, leading to
significant differences in the empowerment of the digital economy on economic advance-
ment, as manifested in the different degrees of digital infrastructure advancement and the
introduction of advanced production equipment and machinery, resulting in different rates
of capital accumulation. This leads to a widening gap in the level of emerging productivity
represented by the digital economy. Such disparities directly impact the enhancement
of employment quality, as regions with lower digital economic development are unable
to fully harness the potential benefits and opportunities offered by the digital economy.
Furthermore, the differentiation of the digital economy will result in varying digital appli-
cation development, therefore preventing the generation of new market demand, and the
differentiation of the digital economy will make the emerging market share related to the
digital economy vary greatly from region to region, causing the employment environment
to form a polarized situation. The digital economy in relatively developed regions is more
able to attract foreign talent to enter, thus making the employment situation gradually one
of “involution”, while the digital economy in relatively underdeveloped regions is facing
talent outflows, and the “quantity” and “quality” of emerging jobs are both hindered, thus
preventing the improvement of the overall employment quality.
Sustainability 2023, 15, 14176 20 of 26

Table 6. Estimation results of the baseline regression.

(1) (2) (3) (4) (5) (6) (7) (8)

−0.060 * −0.064 * −0.117 *** −0.110 ** −0.120 *** −0.118 *** −0.117 ** −0.117 **
lnGini (0.036) (0.037) (0.045) (0.044) (0.044) (0.044) (0.045) (0.053)
0.081 0.041 0.133 0.165 0.187 * 0.182 0.182
lnpgdp
(0.037) (0.095) (0.010) (0.101) (0.107) (0.126) (0.127)
0.375 ** 0.518 *** 0.495 *** 0.541 *** 0.538 ** 0.538 **
Urban (0.184) (0.189) (0.189) (0.202) (0.207) (0.212)
−0.270 *** −0.239 ** −0.231 ** −0.230 ** −0.230 **
lnhc (0.099) (0.101) (0.102) (0.103) (0.105)
−0.089 * −0.088 −0.088 −0.088
ln f ie
(0.053) (0.053) (0.054) (0.054)
−0.043 −0.042 −0.042
lnrin f
(0.066) (0.066) (0.066)
−0.018 −0.018
Policy
(0.244) (0.247)
0.005
Labrstr (0.346)
−1.103 *** −1.937 ** −1.269 −0.031 0.174 0.314 0.357 0.353
cons
(0.028) (0.966) (1.015) (1.101) (1.105) (1.127) (1.272) (1.308)
Individual fixed
Y Y Y Y Y Y Y Y
effect
Time fixed effect Y Y Y Y Y Y Y Y
F 2.77 * 1.76 2.57 * 3.82 *** 3.64 *** 3.09 *** 2.64 ** 2.30 **
R2 0.885 0.885 0.887 0.890 0.891 0.891 0.891 0.891
N 310 310 310 310 310 310 310 310
Note: ***, **, * represent 1%, 5% and 10% levels of statistical significance, respectively; standard errors are in
parentheses. Y represents YES.

4.2. Robustness Tests

This section conducts robustness tests using three different ways to enhance the
robustness and reliability of the regression results mentioned above. The first way includes
calculating the digital economy index using principal component analysis (PCA) to replace
the core independent variable, and then the differentiated characteristics index of the digital
economy is calculated according to the Gini coefficient calculation Equation (7), which
serves as the core independent variable for the robustness test. The second way replaces
the dependent variable by using the employment quality calculated through principal
component analysis, and it is used as the core dependent variable for the robustness
test. The third way simultaneously replaces both the dependent and core independent
variables, with both being calculated using principal component analysis. The results
of the robustness regression tests are presented in Table 7. By analyzing the regression
results, it can be noted that, even after employing the three different methods for variable
replacement, the estimated coefficients linking the core independent variable and the
dependent variable persistently exhibit a significantly negative trend. This further indicates
that the level of differentiation in the advancement of the digital economy has a major
significantly negative effect on employment quality.

Table 7. Robustness tests of the baseline regression.

Substitution of Substitution of Dependent Substitution of both Independent and

Independent Variable Variable Dependent Variables
−0.013 * −0.341 *** −0.111 ***
lnGini (0.088) (0.103) (0.050)
Control variables Y Y Y
Individual f ixed e f f ect Y Y Y
Time f ixed e f f ect Y Y Y
F 25.95 *** 54.90 *** 53.38 ***
R2 0.642 0.791 0.887
N 310 310 310
Note: *** and * represent 1% and 10% levels of statistical significance, respectively; standard errors are in
parentheses. Y represents YES.
Sustainability 2023, 15, 14176 21 of 26

4.3. Endogenous Discussion

There may be endogeneity issues in the baseline regression of Equation (10), which
could lead to biased estimation results. Although control variables and fixed effects are
included in the baseline regression for control, there may still be a problem of reverse
causality affecting the estimation results. It is possible that there exists a reciprocal causal
relationship between the differentiation of the digital economy and employment quality,
where differentiated advancement of the digital economy negatively affects the improve-
ment of employment quality, and the decrease in employment quality may lead to labor
force outflow to economically developed regions, aggravating the differentiation in the
digital economy across regions. This mutual reverse causality gives rise to endogeneity
issues. Therefore, this paper uses historical data as an instrumental variable (IV) to deal
with the endogeneity issue according to Huang et al. [48].
The internet is a continuation of traditional communication technologies, and the digi-
tal economy itself is based on the internet. Thus, the development of telecommunications
infrastructures in various regions during their historical development would, to some ex-
tent, influence the subsequent application of digital technologies, meeting the requirement
of instruments’ variable relevance to the core independent variable. Then, the impact of
traditional telecommunications tools on current employment quality is minimal, satisfying
the exogeneity requirement of the IV. However, the data selected for IVs are cross-sectional
and cannot be directly used with panel data. Therefore, according to Zhao et al. [49], we
use the product of the number of local telephone users in 1990 and the internet penetration
rate from 2003 to 2012 in each region to construct the interaction term as the IV. Meanwhile,
we use the two-stage least squares (2SLS) method for estimation. The data for the number
of local telephone users in 1990 and the internet penetration rate from 2003 to 2012 are
obtained from the “China Compendium of Statistics 1949–2008” and the China Internet
Network Information Center (CNNIC), respectively.
Table 8 reports the regression results after using IVs. From the results, it can be
observed that the IV is significantly negative with the core independent variable at a
significance level of 1%. In the second-stage regression, the coefficient estimates of the core
independent variable remain consistent with the sign in the baseline regression, and the
core variables are still significantly negative with the dependent variables.
Furthermore, according to the results of Anderson canon. corr. LM statistic and Cragg −
Donald Wald F statistic, the hypotheses of unidentifiable and weak IVs of IVs are signifi-
cantly rejected, indicating that all instrumental variables are uncorrelated and exogenous,
so the IVs selected in this paper are reasonable and valid. Therefore, we consider the results
of the baseline regression to be valid, which further verifies the hypothesis of this study that
the differentiated advancement of the digital economy has a significant negative impact on
employment quality.

Table 8. Regression results of the IV.

First-Stage Regression Second-Stage Regression

lnGini lnEmpqlty
−0.892 ***
IV
(0.188)
−0.361 ***
lnGini
(0.178)
Control variables Y Y
Provincial f ixed e f f ect Y Y
Time f ixed e f f ect Y Y
Anderson canon. corr. LM statistic 24.614 ***
Cragg − Donald Wald F statistic 22.511 [16.38]
N 310
Note: *** represents 1% level of statistical significance; standard errors are in parentheses. Y represents YES.
Sustainability 2023, 15, 14176 22 of 26

5. Further Discussion
5.1. Heterogeneity Analysis
For a long time, there have been significant regional disparities in economic develop-
ment in China, with the eastern region having a stronger economic foundation compared
to the central and western regions [50]. The development of the digital economy varies
significantly depending on the supporting environment, resulting in differences in its
impact on employment quality. This study further considers the issue of regional hetero-
geneity by dividing the 31 provinces of China into three parts: eastern, central, and western
regions (eastern regions include Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhe-
jiang, Fujian, Shandong, Guangdong, and Hainan; central regions include Shanxi, Jilin,
Heilongjiang, Anhui, Jiangxi, Henan, Hubei, and Hunan; western regions include Inner
Mongolia, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang). The regression analysis is
conducted by interacting the index of differentiated development of the digital economy,
which is the Gini coefficient of the digital economy, with the dummy variables of the
eastern, central, and western regions.
According to Table 9, the varied progress of the digital economy has a significant
negative effect on employment quality in the eastern region, whereas it demonstrates a
non-significant positive impact on the central and western regions. The eastern regions
attract workers from the central and western regions due to its highly developed digital
economy. However, an excessive influx of labor may intensify employment competition
in the eastern region, leading to a phenomenon known as “involution” and a decline in
employment quality in that region.

Table 9. Heterogeneity regression results.

Eastern Regions Central Regions Western Regions

−0.099 ** 0.147 0.167
lnGini#i.area
(0.042) (0.100) (0.111)
Control variables Y
Provincial f ixed e f f ect Y
Time f ixed e f f ect Y
F 2.85 ***
R2 0.896
N 310
Note: *** and ** represent 1% and 5% levels of statistical significance, respectively; standard errors are in
parentheses. Y represents YES.

5.2. Mechanism Analysis

Table 10 illustrates the estimation results of the mechanism regression. In (9), the de-
pendent variable is the rationalization level of the industrial structure, which is calculated
as shown in Equation (8). In (10), the dependent variable is the transformation and upgrad-
ing level of the industrial structure, while the core independent variables are the interaction
term with the Gini coefficient of the digital economy and the regional dummy variables.
The regression results of (9) in Table 7 indicate that a higher degree of differentiation in the
development of the digital economy is not beneficial for improving the rationalization level
of the industrial structure. The regression results of (10) indicate that the divergent growth
of the digital economy will have a substantially negative effect on the transformation and
upgrading of the industrial structure in the central and western regions of China. However,
the impact on the eastern region, although positive, is not statistically significant.
Sustainability 2023, 15, 14176 23 of 26

Table 10. Mechanism variable regression.

(9)indr (10)indt
−0.041 **
lnGini
(0.021)
lnGini#i.area
0.002
Eastern regions
(0.004)
−0.042 ***
Central regions
(0.008)
−0.029 ***
Western regions
(0.009)
Control variables Y Y
Provincial f ixed e f f ect Y Y
Time f ixed e f f ect Y Y
F 15.40 *** 8.00 ***
R2 0.931 0.964
N 310 310
Note: *** and ** represent 1% and 5% levels of statistical significance, respectively; standard errors are in
parentheses. Y represents YES.

The differentiated development of the digital economy across regions in China distorts
the rationalization level of their industrial structures. With an excessive influx of labor
resources into digitally developed regions, the industrial structure in these regions tends
to become overly advanced, resulting in the waste of resources allocation. Conversely,
regions with relatively underdeveloped levels of digital economy development experience
resource losses related to the tertiary industry, including capital and high-skilled labor
outflows. This will further exacerbate the imbalance in the industrial structure. This
situation ultimately impedes the enhancement, transformation, and advancement of the
industrial structure. So, the incongruity of labor resources across regions, resulting from
the unevenness of the industrial structure, will gradually lead to the “involution” of
employment conditions in developed advanced regions and the outflow of labor from
relatively underdeveloped regions in the digital economy. Therefore, it can be inferred that
the imbalanced development of the digital economy has led to a decline in employment
quality by distorting the industrial structure. This verifies hypothesis two.

6. Conclusions and Policy Implications

This study analyzes the influence of the level of differentiated development of the
digital economy on employment quality based on panel data of 31 provinces in China from
2011 to 2020. It explores the underlying mechanisms and demonstrates that the differenti-
ated development of the digital economy in each region in China has a significant negative
effect on employment quality. Through a series of robustness tests, it is revealed that the
negative impact of differentiated development of the digital economy on employment
quality remains significant. Furthermore, the mechanism regression analysis reveals that
the influence on employment quality is mediated by its impact on the industrial structure.
Based on the above empirical tests, the following policy recommendations are pro-
posed in this paper:
First, improve the rectification of regional disparities in digital economy development
to foster equitable progress across regions. The government should increase financial
support for underdeveloped regions in digital economy development, enhance investments
in infrastructure construction, promote the interconnection and interoperability of the
information infrastructure, facilitate the sharing of information resources, make an effort to
reduce the disparities in the digital economy among regions, provide employees more and
better options, and contribute to the improvement of employment quality.
Second, focus on optimization, transformation, and upgrading of the industrial struc-
ture while driving stable growth in employment. Each region should adopt appropriate
Sustainability 2023, 15, 14176 24 of 26

strategies and gradually develop the tertiary industry. The regions where the primary
industry is the main industry should promote the modernization of traditional agricul-
ture, and the regions where the secondary industry is the main industry should actively
introduce local technology and equipment, promote the upgrading of traditional industries
to automation and intelligence, and develop more high-tech industries [51–53]. And, the
regions where the tertiary industry is the main industry should provide strong support to
relevant industries and undertake the responsibility of labor force transition between the
primary and secondary industries.
Third, explore flexible employment systems and promote the social security institution.
This is due to the fact that the evaluation system for employment quality in this study
primarily focuses on public service and social security. The expansion of the digital economy
has led to the emergence of a wider range of employment prospects in the labor market;
however, it has also resulted in heightened job instability. The emerging employment modes
generated by the digital economy are more flexible, but they are not within the existing
social security system. Therefore, the government needs to establish new employment
management methods, set up a normative governance system based on various issues,
such as labor compensation and social insurance, and further strengthen social security
for flexible employment under the continuous innovation and development of the digital
economy model, thereby improving the quality of employment.

7. Limitations and Future Improvement

The major constraint of this study is the availability of data. The digital financial
inclusion index provided by the IDF is only available up to the year 2020, which means
that the data after 2020 have not yet been published, so this study is unable to capture
the influence of the differentiated level of digital economy development on employment
quality in 2021 and 2022. During this period, China was marked by the profound impact
of COVID-19, which caused substantial shock to economic and social development. Since
then, there have been significant changes in production and lifestyle, with the gradual rise
of online work through the internet. Hence, it remains to be discussed whether workers in
regions with a relatively developed digital economy during this period would have better
employment quality, or whether workers in regions with a relatively undeveloped digital
economy experienced a decline in employment quality. These questions require further
exploration. Therefore, in future research, once the new edition of the Digital Inclusive
Finance Index is released, the author will use the new data to extend the panel data in the
temporal dimension for further in-depth analysis or re-select relevant indicators instead of
the Digital Inclusive Finance Index for further exploration.

Author Contributions: T.L.: Conceptualization; Investigation; Methodology; Data curation; Software;

Formal analysis; Writing—original draft; Writing—review and editing. D.X.: Conceptualization;
Formal analysis; Resources; Investigation; Writing—original draft; Writing—review and editing. Y.F.:
Writing—review and editing. K.Z.: Writing—review and editing. All authors have read and agreed
to the published version of the manuscript.
Funding: This research was funded by the General Project of Humanities and Social Sciences Re-
search in Universities of Henan Province: Research on the Problems of Transportation Infrastructure
Promoting the Integrated Development of Urban and Rural Industries in the New Development
Stage (Grant No. 2023-ZZJH-169), and the Henan University Postgraduate Ideological and Political
Work Project: Research on Enhancing the Influence and Radiation of National Postgraduate Network
Ideological and Political Education Positions.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The datasets presented in this article are not readily available due to
privacy and ethical restrictions. Detailed data sources are specified in the article, which may be found
in the specified document or website if needed.
Sustainability 2023, 15, 14176 25 of 26

Conflicts of Interest: The authors declare no conflict of interest.

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